Translation: Original published in Finnish on 10/6/2026 at 8:00 am EEST.

Harvia is a leading company in its field, boasting clear competitive advantages and strong growth potential. All of this enables good earnings growth and ROIC, as well as value creation, in addition to which the company's capital allocation to acquisitions has been successful. Although the valuation is somewhat high (e.g., a 2026 P/E of 24x), the strong earnings growth outlook makes the expected return favorable. We reiterate our Accumulate recommendation and EUR 47 target price. 

Sauna industry leader with significant US weight

Harvia is the world's largest sauna and spa company. The company itself estimates its market share to be over 5%, which we estimate means that its share of the relevant product market for Harvia would be around 12%. The company has significantly increased its market share over the past seven years (both through acquisitions and organically). Growth has come particularly from North America, which now accounts for 43% of Harvia's revenue (H1'26). After major fluctuations in 2020-2023, the global market has returned to growth, which Harvia expects to exceed 5% per annum in the coming years.

Harvia has clear competitive advantages that support value creation

In our opinion, Harvia has several clear competitive advantages that support the profitable growth and value creation of the company. They relate in particular to the market for traditional sauna heaters and their components, which account for around 50% of Harvia's revenue. Harvia's competitive advantages are: 1) vertical integration and own design, 2) economies of scale (in production), 3) strong brands, 4) broad and long-term distribution relationships. We feel that the company has already been very successful since 2014 in driving the international growth of Harvia and strengthening its competitive advantages. In our opinion, the company has also expanded its competitive advantages to the ready-made sauna product group (~30% of revenue). We estimate that the company has succeeded in creating value by allocating capital to acquisitions. The competitive advantages and moderate capital requirements enable the company an ROIC of above 20% in the coming years.

We believe Harvia will reach its targets, with the US leading the way

Harvia updated its targets in 2024, which include annual sales growth of 10% (including acquisitions) and an operating profit margin of over 20%. We believe Harvia will meet these goals because we estimate its organic growth rate alone will surpass 10% in the coming years. As in recent years, growth will be driven by non-European regions, particularly the US. We believe Harvia will be able to grow faster than the market due to its competitive advantages. In the medium term, we estimate growth will also be supported by stronger expansion into infrared saunas, a market in which Harvia is currently still relatively small, as well as geographical expansion in steam saunas. We expect Harvia to maintain profitability at the target level of 20-21% in the next few years. However, growth investments are reflected in the margin, which is not scaled up significantly in our forecasts despite the growth. We made only minor refinements to our estimates in this report. 

Earnings growth supports good expected return

We believe Harvia's current year multiples (EV/EBIT 19x, P/E 24x) appear high in absolute terms, but acceptable given the company's quality and growth profile. We consider the company's return on capital and cash flow generation capabilities excellent, and multiples will moderate in the coming years. We believe that Harvia’s capital allocation will continue to be value-creating, and thus channeling cash either to acquisitions or larger dividends would support the investor's expected return. We also see Harvia as a viable acquisition target. The expected return of the share is driven primarily by annual earnings growth of around 15%, with the role of dividends and multiple revisions being less significant.