Translation: Original published in Finnish on 2/12/2026 at 8:58 am EET.

Sitowise's Q4 bottom line was in line with our expectations, and the long-awaited turnaround began to take its first steps. Cash flow at the end of the year was much better than we expected, which was encouraging given the tight balance sheet situation. However, investors cannot yet breathe a sigh of relief, as financial risks are high. Nevertheless, with the stabilization of the earnings slide, we are now ready to explore the company's potential. We raise our recommendation to Accumulate (was Reduce) and our target price to EUR 2.6 (was EUR 2.20).

Sales exceeded our estimates and the result was as expected

Sitowise's Q4 revenue grew by about 3% in reported terms to 50.2 MEUR, while we had expected a 1% decline to 48.0 MEUR. Infra grew by a robust 13% to 20.2 MEUR, beating our expectations. Digital Solutions sales, on the other hand, fell by 2% to 9.4 MEUR, contrary to our expectations, due to declining project business volumes, but the segment's strategically important recurring revenue continued to grow by 10%. Sales in the Buildings segment decreased by 3% to 13.3 MEUR. The decline in sales in Sweden slowed significantly from previous quarters, decreasing by only 3% at 7.3 MEUR, compared to a 19% decline last quarter. 

Adjusted EBITA increased to 2.2 MEUR (Q4'24: 1.2 MEUR), in line with our forecast. Verbal descriptions of the segments revealed that Infra remained highly profitable (over 12%). Digital Solutions also continued to deliver healthy profitability (5-10%). The Swedish and Buildings businesses were loss-making. The net debt/EBITDA ratio decreased to 4.9x (Q3’25: 7.2x), thanks to improved earnings and strong cash flow in Q4, though it remains at a high level. If the result improves in line with our forecasts, the target level of 2.5x will be reached in 2027. This is important because the company's current financing package is set to expire in the summer of 2027.

No major surprises in the guidance

The company's order book also increased initially to 152.5 MEUR (Q4'24: 151 MEUR), while the number of full-time employees fell by 5% year-on-year to 1,684. The current ratio of employees to workload appears balanced, forming a basis for our expectations for earnings growth in 2026. As in the previous year, the company did not venture to provide earnings guidance and expects the recovery of the construction market to be slow, not becoming more widespread until 2027.

Our big-picture forecasts unchanged

We forecast that Sitowise's revenue will increase by 2% in 2026 and that its adjusted EBITA margin will end up at 6.1% (2025: 4.7%). Without sales growth, improving profitability will be challenging for the company, and we expect a clearer recovery to occur only in the latter half of 2026 and in 2027. Growth will accelerate then to 6-8%, thanks to increased construction and investment activity and reduced price competition. In the longer term, we expect the operational leverage to support margin improvement towards an EBITA margin of 9%, though we do not predict the group as a whole will return to the company's targeted EBITA margin of 12%.

Realizing earnings growth is crucial

According to our forecasts, the EV/EBITDA ratio will remain high at 8x in 2026. High financial expenses will also significantly erode net earnings, leading to an even higher P/E ratio of 59x. However, it is clear that the company's earnings potential is significantly higher than the current level because the company is now operating at the bottom of the market cycle. Therefore, we believe that the 2027 valuation (EV/EBITDA: 6x, P/E: 14x), as well as the one for 2028 (EV/EBITDA: 5x, P/E: 9x), better reflect Sitowise's valuation in relation to the company's normalized earnings performance. In our view, the halt in the decline of earnings has improved the risk/reward ratio of the share, and we are now prepared to examine the share's potential more closely. Financial risks remain high if our projected earnings growth were not to materialize.