Last Update 07 Dec 25

Fair value Decreased 10%

ROCK B: Deep Value And Margin Recovery Will Drive Long-Term Upside Potential

Analysts have trimmed their price target on Rockwool to about DKK 250 from roughly DKK 278, reflecting a slightly higher discount rate and lower margin assumptions, even as they acknowledge improving revenue growth prospects and see deep value at current share levels.

Analyst Commentary

Bullish analysts highlight that the recent target price revisions still imply meaningful upside from current levels, pointing to what they describe as deep value in the shares. They argue that the company is better positioned for an eventual pickup in construction activity and insulation demand, which could support both top line growth and operating leverage over time.

Bearish analysts, however, caution that execution risks and a slower than expected margin recovery justify only modest upward revisions to valuation, or even slight cuts to price targets. They stress that while the long term structural story remains intact, near term earnings volatility and macro uncertainty continue to cap how aggressively they can underwrite multiple expansion.

Bullish Takeaways

Recent upgrades and higher target prices from some bullish analysts reflect growing confidence that Rockwool can capture accelerating demand in insulation, supporting a healthier medium term growth trajectory.
The shares are viewed as offering deep value relative to long term earnings power, with upside potential if margins normalize and the company executes on cost efficiencies.
Improved sentiment around the construction cycle and energy efficiency investments is seen as a positive catalyst for revenue growth and mix, which could drive a re rating of the stock.
Bullish analysts see room for Rockwool to sustain or gradually expand returns on capital as operating discipline improves, which they believe justifies a premium to current depressed valuation multiples.

Bearish Takeaways

Bearish analysts trimming price targets argue that slower than expected margin recovery and cost inflation warrant more conservative earnings and valuation assumptions.
They highlight execution risk around delivering consistent profitability in a still choppy construction environment, which may limit near term multiple expansion.
There is concern that a more muted macro backdrop could delay the realization of the long term growth thesis, which could lead to prolonged share price underperformance versus peers.
Some caution that, while the stock looks inexpensive on headline metrics, visibility on the pace of recovery remains limited, which in their view justifies a neutral rather than strongly positive stance.

What's in the News

Rockwool A/S revised its full year 2025 earnings guidance, now expecting an EBIT margin between 14% and 15%, compared with a previous outlook of below 16%. The company maintained its expectation that revenue will be roughly in line with last year (company guidance).

Valuation Changes

Consensus Analyst Price Target: The fair value estimate has fallen moderately to about DKK 250 from roughly DKK 278, reflecting a more cautious outlook.
Discount Rate: The discount rate has risen slightly to around 6.30% from about 6.24%, indicating a marginally higher perceived risk or required return.
Revenue Growth: Revenue growth assumptions have increased meaningfully to approximately 4.8% from about 3.5%, suggesting stronger expectations for top line expansion.
Net Profit Margin: Profit margin forecasts have declined modestly to around 12.4% from roughly 13.5%, pointing to a more conservative view on profitability.
Future P/E: The assumed future price to earnings multiple has edged down to about 13.1x from roughly 13.8x, indicating slightly lower valuation expectations on earnings.

Expansion in key regions and capacity upgrades, including electrified production, position Rockwool to benefit from rising demand linked to energy efficiency and building regulations.
Strong pricing, innovation, and automation enhance market share, efficiency, and premium product positioning, supporting long-term revenue growth and margin resilience.
Sustained economic and geopolitical instability, rising costs, and weak demand threaten Rockwool's growth, profitability, and ability to effectively deploy capital, especially in key markets.

Catalysts

About Rockwool

Produces and sells stone wool insulation products in Western Europe, Eastern Europe, Russia, North America, Asia, and internationally.What are the underlying business or industry changes driving this perspective?

Significant project pipelines in North America and commercial/industrial end markets remain intact, with orders delayed but not canceled; once macro uncertainty (inflation, tariffs, interest rates) subsides, a substantial rebound in demand could drive revenue acceleration and margin recovery as utilization improves.
Ongoing and near-term capacity expansions in key growth markets (U.S., Romania, India, West Coast U.S., France), including new electrified production lines, position Rockwool to capitalize on surging demand from tighter building codes and energy efficiency mandates, supporting both top-line growth and higher utilization-driven margin leverage over the medium
to long-term.
Robust pricing discipline, continued product innovation, and expansion in channels (e.g., U.S. big box retail and new regional customers) are enabling the company to sustain higher average selling prices and capture additional market share, which should translate into improved revenue quality and gross margins as market conditions stabilize.
Sustained investment in digitalization and automation, as well as hiring engineering talent, is set to yield long-term efficiency improvements and lower per-unit costs, supporting structurally higher net margins and resilience against input cost volatility.
Strong regulatory and customer focus on decarbonization, fire safety, and sustainable non-combustible materials continues to favor stone wool insulation solutions, allowing Rockwool to maintain premium positioning and tap into secular retrofit and new-build demand tailwinds that can drive sustained revenue and earnings growth.

Rockwool Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Rockwool's revenue will grow by 4.6% annually over the next 3 years.
Analysts are assuming Rockwool's profit margins will remain the same at 13.7% over the next 3 years.
Analysts expect earnings to reach €607.3 million (and earnings per share of €2.87) by about September 2028, up from €530.0 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.4x on those 2028 earnings, up from 12.5x today. This future PE is lower than the current PE for the GB Building industry at 290.2x.
Analysts expect the number of shares outstanding to decline by 5.55% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.03%, as per the Simply Wall St company report.

Rockwool Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistent macroeconomic and geopolitical uncertainty-especially in North America and Eastern Europe-has led to project delays, reduced order flow, and a rapid decline in customer sentiment, potentially leading to stagnant or declining revenues in Rockwool's historically high-growth regions.
Rising operational expenditures, including increased investments in capacity expansion, digitalization, engineering hires, and higher-than-normal maintenance and restructuring costs (e.g., factory closures and unexpected breakdowns), are elevating the company's fixed cost base and putting sustained downward pressure on net margins.
Overcapacity or slower ramp-up of new production facilities could coincide with subdued or delayed market demand, especially in the U.S. and Europe, resulting in underutilized assets and inefficient capital deployment-significantly impacting earnings growth and return on invested capital.
Market-specific pricing power may erode if competitors lower prices in a soft demand environment, or if customers resist price increases due to construction activity slowdowns-impacting Rockwool's ability to offset inflation and cost increases and compressing profitability.
Prolonged lack of visibility and control over the Russian business, ongoing loss of revenue from this region, and potential for further geopolitical developments or sanctions, create structural risk to group earnings and cash flows, with dividends from Russia being the only remaining contribution but subject to high uncertainty.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of DKK291.729 for Rockwool based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of DKK360.0, and the most bearish reporting a price target of just DKK249.89.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €4.4 billion, earnings will come to €607.3 million, and it would be trading on a PE ratio of 13.4x, assuming you use a discount rate of 6.0%.
Given the current share price of DKK237.75, the analyst price target of DKK291.73 is 18.5% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

New Capacity Expansions And Energy Efficiency Will Drive Future Demand