Translation: Original published in Finnish on 10/30/2026 at 08:10 am EET

Posti's Q3 earnings exceeded our expectations as the parcel business continued its profitable growth. We estimate Posti's earnings development to continue favorably, driven by growing industries and supported by Postal Services, which generates stable earnings. Relative to the robust earnings growth and good dividend yield, we find the expected return of the share attractive. We reiterate our Accumulate recommendation and raise our target price to EUR 13.5 (previously EUR 13.0) with estimate hikes.

Strong earnings improvement driven by parcel delivery services

Posti's revenue rose by 2% in Q3, as eCommerce and Delivery Services continued their strong growth, supported by revitalized demand and new customer accounts. High volume growth in the segment translated into earnings very efficiently, enabled by good cost control. In Fulfillment and Logistics Services, earnings remained at the level of the comparison period despite slight sales growth. The rather muted earnings trend is likely explained by changes in the sales mix, but we believe the improving trend underneath bodes well for the future. In Postal Services, the digital transition of official communications in turn weighed on volumes more steeply than earlier in the year, which pushed earnings below the comparison period. The segment's earnings were at a good level, which demonstrates Posti's ability to profitably manage a declining business. The group’s adjusted EBIT rose to 20 MEUR (Q3’25: 17 MEUR), which corresponds to a good margin of 5.7%.

Guidance unchanged, we raised our estimates

Posti reiterated its guidance for 2026, indicating revenue of 1,400–1,500 MEUR (2025: 1,448 MEUR) and adjusted EBIT of 63–79 MEUR (2025: 69 MEUR). To reach the lower end, Posti must generate 24 MEUR in adjusted EBIT in Q4, which is a significantly lower level than in the comparison period (Q4’25: 31 MEUR). We consider the earnings guidance to be somewhat cautious, as Posti's earnings have clearly improved over the past two quarters. Our estimates for the current year remained unchanged, but we slightly raised our earnings estimates for the near future. The upward revisions were focused particularly on eCommerce and Delivery Services, where volume growth has scaled surprisingly strongly into earnings.

Volume growth and efficiency measures support earnings growth in the coming years

We expect Posti’s revenue growth to be moderate, as the decline in Postal Services weighs on the sales growth of other operations. We estimate that the positive volume development of the growing businesses will support their earnings development in the coming years. In Postal Services, we expect earnings to remain stable. In our view, improving earnings amidst a rather sharp decline in letter volumes will prove challenging. We estimate that the Astra renewal program, through which the company is seeking 40 MEUR in savings over the coming years, will support delivery efficiency and have a positive impact on the group's margin. Our estimates also include an assumption of a slight improvement in the market environment, which appears realistic based on recent economic developments. We expect the group's adjusted EBIT to grow at an annual rate of around 9% () in the medium term.

Risk/reward is attractive

Based on the last 12 months' earnings, Posti trades at some 14x P/E and EV/EBIT multiples (IFRS 16 adj. ~12x). The multiples are slightly elevated due to the share price increase, but Posti's strengthened earnings growth outlook justifies the increase, in our opinion. We believe that the earnings growth we are forecasting will lower the multiples to attractive levels in the medium term (2028e P/E 9x and IFRS-16-adj. EV/EBIT 8x). An average dividend yield of 8% provides a solid foundation for the expected return. We expect Posti's total expected return (~15% p.a.) to exceed our required return (CoE 10%), making the share's risk/reward attractive. Our DCF model and sum-of-the-parts calculation (EUR ~14-15) indicate upside potential for the share, also supporting our positive view.