* Earnings momentum to continue, +12% y-o-y in Q4
* Estimates up modestly; EBITA +10% y-o-y '27e, FCF +70%
* Share trading at 10x adj. EPS '27e and 11% FCF yield
Double-digit earnings growth set to continue
Coor delivered a solid Q3 report. Most operations (SE+NO+FI) developed positively, with underlying organic growth and margins improving. Despite showing -1% organic growth, NO was strong considering +22% last year (boosted by elevated variable volumes). DK, which has been the main source of negative surprises in recent quarters, remained soft in Q3, as expected. However, Q3 saw the positive effects in SE+NO+FI offset weaker earnings in DK, driving solid group earnings growth of 12% y-o-y, in line with the all-time high Q3 earnings set in 2021. With good business momentum and somewhat easing comps in DK, we expect Q4 to print record earnings of +12% y-o-y. The better growth momentum and productivity gains should carry into 2027 as well. Coupled with restored margins in DK, we forecast 10% adj. EBITA growth in 2027.
Cash conversion to recover in 2027
Restoring Coor's historical stability and strong cash generation is key for the story. Management has shown progress on the former, in our view, but cash conversion remains subdued, although we think it will improve in 2027. Lease adj. FCF was SEK 75m (50% FCF/adj. EBITA) in Q3 and SEK 268m LTM (41%), i.e. well below potential. Higher restructuring and interest costs have weighed on cash generation from 2024-2026. But with gearing now well below 2024's 30x at 2.3x, and limited need for further restructuring, we expect substantially better 2027 FCF of SEK 505m, +70% y-o-y.
Modest earnings upgrade; 11% FCF yield
We leave 2026e adj. EBITA largely unchanged and raise 2027e-2028e by 1%, mainly on higher NO. We marginally trim SE and DK, and remove buybacks for the moment due to the owner situation, leading to the lower EPS estimates. The share is now trading at 10x adj. EPS and 9x adj. EBITA on 2027e (11% FCFy).