Solwers Q3'26 preview: Earnings turnaround moves further away
Summary
- Solwers' new guidance for 2026 indicates potential non-compliance with the net debt/EBITDA covenant by year-end, prompting a reduction in earnings estimates and a target price cut to EUR 1.3 from EUR 1.8.
- Q3 revenue is expected to decrease to 17.3 MEUR from 17.6 MEUR in Q3'25, with acquired companies not fully offsetting the decline in organic revenue.
- Solwers anticipates 2026 EBITA to be positive but below the previous year's 1.1 MEUR, with revenue slightly under the 80.6 MEUR level, suggesting a more significant relative decline in EBITA than revenue.
- The risk/reward ratio remains insufficient due to high earnings-based multiples and significant risks related to the earnings turnaround and balance sheet structure, despite potential upside if sustainable growth is achieved.
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Translation: Original published in Finnish on 10/23/2026 at 07:55 am EEST
| Estimates | Q3'25 | Q3'26 | Q3'26e | 2026e | |
| MEUR / EUR | Comparison | Actualized | Inderes | Inderes | |
| Revenue | 17.6 | 17.3 | 79.3 | ||
| EBITA (adj.) | 0.4 | 0.2 | 1.0 | ||
| EBIT | 0.3 | 0.0 | 0.3 | ||
| Revenue growth-% | 5.5 % | -1.3 % | -1.6 % | ||
| Adj. EBITA-% | 2.3 % | 1.0 % | 1.2 % | ||
Source: Inderes
Solwers provided new guidance for 2026 on Thursday and simultaneously warned that the net debt/EBITDA covenant may potentially not be met at year-end. The outlook fell short of our previous estimates in terms of both revenue and earnings, so we clearly lowered our earnings estimates for the current year. We also lowered our estimates for the coming years, as we expect the earnings turnaround to be pushed further into the future than we previously expected. We reiterate our Reduce recommendation and cut our target price to EUR 1.3 (was EUR 1.8).
Q3 earnings are likely to remain subdued
We now expect Q3 revenue to have decreased to 17.3 MEUR from the comparison period's 17.6 MEUR. Companies acquired at the end of last year support revenue, but we estimate that they will not be sufficient to cover the decrease in organic revenue.
We expect EBITA to fall to 0.1 MEUR (EBITA a. 0.2 MEUR, Q3'25: 0.4 MEUR). According to the company, efficiency measures in subsidiaries with low profitability have progressed and will support earnings in the latter part of the year, but we estimate the impact will primarily be seen only in the fourth quarter.
New outlook tightens covenant situation
Solwers now estimates that 2026 EBITA will be positive but remain below the previous year's 1.1 MEUR, and that revenue will remain slightly below the previous year's level of 80.6 MEUR. H1 EBITA was 0.3 MEUR, meaning the outlook allows for at best a slightly better EBITA in the second half compared to the comparison period (H2/25: 0.7 MEUR) Since the company states that revenue will remain slightly below the previous year but does not use the same phrasing for earnings, we interpret that EBITA will decrease more than revenue in relative terms. We estimate that full-year EBITA will remain at around 0.7 MEUR (adj. EBITA 1.0 MEUR), which requires a clearly weaker result in the second half of the year compared to the comparison period.
We also lowered our estimates for next year, as a lower baseline and fierce price competition will, in our view, slow down the earnings turnaround. We now expect next year's EBITA to be 2.7 MEUR (previously 4.0 MEUR).
The covenant limit for the net debt/EBITDA ratio is 5.0x under the current terms at year-end. At the end of June, the ratio was around 5.0x according to the company. Based on its updated forecast, Solwers estimates that the condition may not be met at the year-end review point. With our new estimates, net debt at the end of the year will be around 27 MEUR and the ratio to reported EBITDA will be around 6x, meaning the covenant limit would be clearly breached. Solwers is initiating negotiations with its main financer, and we consider a new waiver the most likely outcome, which would likely increase financing costs. The company received a waiver for the measurement dates in June 2025 and 2026 as well. The limit will tighten to 4.75x in March 2027 and to the original 3.5x in June. Based on our estimates, the condition will not be met on these measurement dates either, unless the thresholds are relaxed in the ongoing negotiations. In the Q3 review, we expect management to comment on the progress of negotiations and the balance sheet situation, which the company does not disclose in detail in its Q1 and Q3 reviews. In the longer term, we still cannot rule out heavier balance sheet cleanup measures, such as a share issue, if the earnings turnaround does not materialize. This would dilute the stake of existing shareholders unfavorably.
The risk/reward ratio is still not sufficient
We lower our target price to EUR 1.30 (from 1.80). Following the estimate changes, our DCF model value fell to EUR 1.4 per share With our estimates for the current and next year, the earnings-based multiples are high, as earnings are only just recovering from the bottom. If earnings turn to sustainable growth, however, the current pricing would offer upside. However, we still view the risks associated with the turnaround and balance sheet structure as so high that they limit the stock's attractiveness at present.