Sanoma Q3'25: Earnings growth will accelerate next year

Translation: Original published in Finnish on 10/30/2025 at 10:30 pm EET

Sanoma's Q3 operational performance was slightly better than we anticipated, and the upward revision of the current year's earnings guidance range met our expectations. We expect the company's earnings growth to accelerate next year as demand for Learning's materials increases and the benefits of its efficiency program emerge. We estimate that the company will also accelerate growth through acquisitions, and more information on these plans is expected to be provided at the CMD on November 25. We revise our target price to EUR 11.2 (was EUR 10.9), and reiterate our Accumulate recommendation for the share, which offers a good expected return with earnings growth.

Operationally, Q3 went quite well

The operational development of Sanoma’s Q3 was slightly better than we anticipated. Despite a 4% decrease in revenue in line with our expectations, the company's operating EBIT before acquisition cost amortizations (172 MEUR) slightly exceeded the comparison period and our estimate. The earnings improvement was driven by Media Finland's better-than-expected performance, as it improved its profitability due to a more favorable revenue mix and a decrease in costs. We commented on the Q3 results earlier here.

Guidance was specified as expected

In the report, Sanoma specified its guidance for this year in terms of both revenue and operating EBIT Sanoma now estimates that its revenue for 2025 will be 1.29-1.31 BNEUR (was 1.28-1.33 BNEUR) and operating EBT excl. PPA amortization to be 180-190 MEUR (was 170-190 MEUR). The earnings guidance specification was in line with what we outlined in our earnings preview.

We made only minor (0-1%) changes to our operational earnings estimates for the coming years after the Q3 report. Our 2025 operating EBIT (excl. PPA amortizations) estimate is 188 MEUR, so an upward revision of the earnings guidance is not out of the question later in the year. From next year onwards, we expect Sanoma's earnings growth to accelerate, driven by increased demand for learning materials and improved efficiency (2026e operating EBIT excl. PPA amortization 217 MEUR, 16.6% of revenue).

CMD is approaching

Sanoma will host a CMD next month (11/25), where it will present its growth plans for 2026-2030. With a strengthened profitability base and financial position, we believe the company will once again become more active on the M&A front than in the recent past. Thus, in addition to Learning's organic growth and the earnings improvement potential brought by the efficiency program, the company's plans for inorganic growth are at the core of the CMD. The company’s current target of over 2 BNEUR revenue by 2030 necessitates, by our estimates, over 500 MEUR of inorganic revenue growth. Success in capital allocation is crucial to the investment story at the end of the decade.

Good expected return from earnings growth and dividend

We do not believe there is any upside in the 2025 earnings-based valuation of Sanoma's stock, as the adjusted P/E ratio is 19x and the corresponding adj. EV/EBITA is 13x. With the significant earnings growth of Learning, the corresponding valuation multiples for 2026-2027 fall to 14-13x and 11-10x, which we consider attractive. Thus, the expected return, consisting of earnings growth and an estimated dividend yield of around 4.5%, is good relative to Sanoma's moderate risk profile. This valuation is also supported by our updated cash flow model at EUR 11.3.