Translation: Original published in Finnish on 10/9/2026 at 10:26 am EEST.

In our view, Componenta's risk/reward ratio remains attractive despite the share price increase, as the structural strengthening of demand enables significant earnings growth, the first evidence of which was seen in H1'26. We raised our earnings estimates for 2027–2028, and the earnings-based valuation is not challenging for the coming years. Reflecting these factors, we raise our target price to EUR 8.0 (from EUR 6.9) and reiterate our Accumulate recommendation. However, a short track record of the permanence of the profitability improvement and the higher share price have increased the risk level of the stock.

Earnings sustainability is at the core of the investment story

The rock-solid H1'26 demonstrated significant progress in Componenta’s multi-year transformation, reflected in a step change in both returns on capital and balance sheet position.  Driven by structural changes at the company in recent years and structurally improved demand drivers, the investment profile has shifted from turnaround story to profitable growth company. Componenta’s long-term healthy demand drivers in the defense and energy segments support our view of a structural shift, while a recovery in the currently sluggish segments creates scope for positive earnings surprises. The sustainability of the profitability turnaround and the company’s margin level in the coming years are central to the investment story. The earnings improvement this year is significant relative to recent years, and our forecast EBIT margin (Inderes 2027e: 7.2%) comfortably exceeds the floor of Componenta’s own target for next year (above 5%).

We raised our profitability estimates

We raised our profitability forecasts for 2027–2028, as we estimate the operational leverage to be stronger than our previous assumptions. The profitability jump in H1’26 relied mainly on volumes, and the company has already increased its personnel for growth, so we estimate that growth in the coming years will not require similar cost increases. In 2028, our earnings forecast is further supported by an increase in foundry utilization rates as the agricultural and forestry machinery markets recover. We forecast the adjusted EBITDA margin to rise to 11.2% in 2027 and 11.5% in 2028 (previously 10.8%), which raised our adjusted EBIT forecasts by 6–10%. Our estimates for 2026 remain unchanged.

The margin increases are contingent on the realization of our revenue growth forecast (10% and 7% in 2027–2028), which we consider to be the main risk to our forecasts. No new company releases have been published, but there is discord visible across customer industries. In agricultural machinery, AGCO lowered its full-year guidance at the end of July, and John Deere reported declining European volumes in August, meaning that the recovery could be slower than we expect. In the energy industry, Wärtsilä's demand has remained very strong, and the growth expectations of machinery manufacturing customers have remained stable.

Valuation is not demanding on forward estimates

On our forecasts, factoring-adjusted EV/EBITDA for 2026 and 2027 stands at approximately 6.0x and 5.2x, with adjusted P/E at 12.7x and 9.8x respectively. We view adjusted P/E as the best near-term valuation metric for Componenta, and at just under 10x on next year’s forecasts, combined with a dividend yield of around 2%, it keeps the risk/reward attractive. Our DCF value rises to EUR 8.1 on estimate upgrades, a lower required return, and refined long-term assumptions.