KONE Q4'25: Smooth ride, elevated price tag

Translation: Original published in Finnish on 2/9/2026 at 8:00 am EET.

We reiterate our Reduce recommendation for KONE and our target price of EUR 56. The company's Q4 results were in line with expectations, while orders received exceeded forecasts. The guidance provided for this year was quite well in line with our expectations, although we believe the lower ends of the guidance leaned towards caution. We estimate that the guidance came as a slight disappointment to the market after the recent share price increase. We made only small negative revisions to our estimates in connection with the report. In our view, the stock's valuation is currently somewhat stretched, and despite a good earnings growth outlook for the coming years, we estimate that the risk-adjusted expected return will be insufficient. 

Q4 result in line with estimates

KONE's adjusted EBIT of 402 MEUR in Q4 was in line with our and market expectations. With this development, the company continued its third consecutive year of annual margin improvement. In turn, reported Q4 order intake (+6.3% y/y) exceeded both our and consensus expectations. At comparable exchange rates, growth was as high as 12.2%, and according to KONE, the margin of orders received remained stable compared to the comparison period.

The lower ends of the guidance range appear cautious

In its guidance for 2026, KONE expects its sales to grow by 2-6% at comparable exchange rates and its adjusted EBIT margin to be 12.3-13.0%. According to the company, key revenue drivers include positive outlooks in maintenance and modernizations, as well as a solid order book. Similarly, revenue growth and an improved sales mix, together with efficiency programs, support margin development. However, pressure on growth and profitability continues to come from New Building Solutions in China. We believe the lower ends of the guidance ranges appear cautious relative to the underlying assumptions and recent developments (cf. 2025 orders received +6.8% y/y at comparable exchange rates, order book +4.5% y/y at comparable exchange rates, 2025 adj. EBIT-% 12.2%). We believe the midpoint of the margin guidance, in particular, came as a slight disappointment to the market (compared to the consensus estimate of 12.9% before the Q4 results). Typically, KONE refines its guidance during the year, and without significant changes in the market situation, we believe the company should be able to raise at least the lower ends of its ranges.

Reflecting the guidance and the company's comments, we lowered our revenue forecasts for new construction solutions, while only fine-tuning those for maintenance and modernization. Our margin estimates remained unchanged, and we expect the adjusted EBIT margin to be at the upper end of the guidance range at 12.8% this year. As a result, the impact of the forecast revisions remained marginal (change in 2026-27e adjusted EBIT forecasts of 1-2%). We expect KONE to achieve its targeted margin improvement (2027 adjusted EBIT%: 13–14%) in line with its targets through an improved sales mix and efficiency measures.

Earnings growth will be used to digest the multiples

Based on 2025 realized earnings, we believe the stock's valuation multiples at the current share price are high (EV/EBIT 22x, P/E 31x), even for a defensive quality company like KONE. With the good earnings growth rate in the coming years (adjusted EBIT growth 2026e–27e: 9–12% per year), we believe the valuation will only fall to a neutral level by 2027 (2027e EV/EBIT 18x, P/E 25x). Thus, we estimate that the earnings growth in the coming years will largely be absorbed by the multiples, and the risk-adjusted expected return will remain insufficient despite an annual dividend yield of 3-4%. Our view of the stock's somewhat tight valuation is also supported by the DCF model, which emphasizes longer-term potential and is approximately at our target price level.