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Research

Tokmanni Q4'24 preview: Strong result and guidance expected

By Arttu HeikuraAnalyst
Tokmanni Group
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Translation: Original published in Finnish on 3/3/2025 at 9:42 pm EET.

Tokmanni will report its Q4 results on Friday at 8:00 am EET. We expect the year-end to have been good for the company in all its main markets, which will support earnings growth. The company's 2025 guidance should point to significant earnings growth. In the update, we slightly raised our earnings estimates as a result of the SPAR collaboration. We believe that the share price increase has absorbed the most glaring undervaluation. We lower our recommendation to Accumulate (was Buy) and raise our target price to EUR 15.5 (was EUR 14.0) due to estimate revisions.

We believe the quarter clearly outperformed the beginning of the year

In line with consensus, we expect Tokmanni's Q4 revenue to have increased by 4% to 489 MEUR. The projected growth will be driven by both segments (Tokmanni 2% and Dollarstore 8%) with new stores and accelerated comparable sales growth. Dollarstore is now reporting its first full quarter with an expanded private label portfolio, which we believe has positively impacted the segment's figures. While a mild winter may cause some softness in sales, we believe the company's pricing efforts and good product availability led to good Christmas sales in each of its major markets. We expect the company to have improved its adjusted EBIT to 49 MEUR (consensus 48 MEUR), representing 9.9% of revenue. At the top level, the profitability improvement comes from a better gross margin as well as from the scaling of the fixed cost structure. At the segment level, we expect Dollarstore (+11%) to have driven the group's earnings improvement, mainly through faster comparable growth and improved sourcing, while we expect Tokmanni (+2%) to have slightly improved from the comparison period. Our EPS forecast of EUR 0.51 (consensus EUR 0.54) is mainly driven by improved profitability.

Guidance should communicate significant earnings improvement

We expect Tokmanni's board of directors to propose a dividend of EUR 0.59 per share, which is in line with the company's dividend policy (70% of net profit). We expect the company's guidance for the current financial year to be in the range of 1,720-1,820 MEUR for revenue and 110-140 MEUR for adjusted EBIT. However, the company may raise the upper end of the EBIT guidance in line with its long-term target (150 MEUR). This would imply a margin of around 8.5% on our revenue estimate, which we consider unlikely given the company's stage of development (Dollarstore profitability ramp-up underway and Finnish grocery ramp-up starting).

We raised our earnings estimates in connection with this report

Our earnings estimates for 2026 have been increased by approximately 3%. The increase is due to the expansion of the grocery assortment in the Tokmanni segment and the increase in fresh food departments. The impact for 2025 will be limited in our view. At the group level, our forecast of 12% annual earnings growth is mainly driven by the expansion of Dollarstore and the segment's profitability improvement on the back of comparable sales growth and more efficient sourcing. The main risks to the forecast are therefore related to the success of Dollarstore's profitability improvement and the expansion of the grocery business in Finland.

Expected return remains sufficiently high

We continue to see an attractive valuation picture for the share. The company is priced at fairly moderate earnings multiples (2025 P/E 12x and IFRS 16 adj. EV/EBIT ~10x), where we see upside. These multiples are well below the peer group median, which also supports the stock's upside potential. In addition, expected returns are supported by a healthy dividend yield of 5%. Our view of a moderately priced stock is supported by a DCF value of a good EUR 16. The share's most striking upside has been eroded by the price increase, but we believe the share offers investors sufficient expected returns to compensate for the risk associated with the transition phase.

Tokmanni Group

13.76EUR03.03.2025, 18.00
15.5EURTarget price
Accumulate
Changed from:Buy
Recommendation updated:03.03

Tokmanni Group is a variety discount retailer in the Nordics. The group has stores in Finland, Sweden and Denmark under the brand names Tokmanni, Dollarstore, Big Dollar, Click Shoes and Miny. In addition, Tokmanni has online stores. Tokmanni's headquarter and logistics centres are located in Mäntsälä, Finland. Dollarstore is headquartered in Kista, Stockholm with a central warehouse in Örebro. The group own a procurement company located in Shanghai together with a Norwegian discount store chain Europris.

Read more on company page

Key Estimate Figures03.03

202324e25e
Revenue1,392.61,666.91,776.2
growth-%19.2 %19.7 %6.6 %
EBIT (adj.)98.8103.7123.6
EBIT-% (adj.)7.1 %6.2 %7.0 %
EPS (adj.)1.020.891.18
Dividend0.760.590.79
Dividend %4.9 %6.7 %9.0 %
P/E (adj.)15.29.87.5
EV/EBITDA8.65.64.8
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