* EBIT of USD 1.9m, 169% above consensus 0.7m
* De-risks estimates for 2027, but not enough to drive positive revisions
* Share is trading at 6x P/E on 2027e with USD 24m net cash position
Q3 results
G5 delivered a Q3 report with stronger than expected profitability, although the sales trend remains negative. Sales declined 20% y-o-y (in USD) but was in line with consensus expectations. EBIT surprised positively at USD 1.9m, increasing 46% y-o-y driven by the cost savings which had a larger-than-expected effect and was therefore 169% higher than consensus 0.7m. Adjusted for one-time costs related to the cost savings programme and FX effects, EBIT was 2.0m, a 10% margin (6%) and 109% better than our forecast of 1.0m. FCF was -1m driven by working capital. Excluding WC, FCF was 1.5m. Net cash remained at 24m
Outlook estimate changes
Growth outlook remains somewhat muted, with sales continuing to decline on a sequential basis despite good momentum for G5 Store (+16% y-o-y, and third-party revenues growing 41% q-o-q). This limited revisions despite the stronger earnings print. However, we think the cost savings de-risks 2027 estimates. We do not expect any material consensus revisions for 2027 based on the report. On the earnings call, said it will continue with initiates to stabilise sales and were positive on G5 Store to support this. It needs a net cash position to support initiatives to reverse the sales trend, but also indicated that it aims to continue buying back shares and if profitability remains at good levels, potentially increase the dividend again. With a net cash position of USD 24m, the enterprise value is ~USD 26m.
Final thoughts
The share has traded down into numbers (-6% L1M vs OMXSGI +2%) and is down -2% L3M vs OMXSGI +1%. It is currently trading at 6x P/E on our unrevised 2027e.