Hearing And Enterprise Trends Will Drive Future Opportunity

Key Takeaways

• Innovative hearing products and operational efficiencies are driving higher margins and capturing greater share among aging consumers.
  
• Sustained demand for enterprise communications and digital cost optimization underpin resilient earnings and position the company for improved profitability when external pressures ease.
  
• Weak demand, rising costs, competitive pressures, and market volatility threaten GN Store Nord's margins, pricing power, and sustainable growth across key divisions.

Catalysts

Provides hearing, audio, video, and gaming solutions in Denmark, rest of Europe, North America, and internationally.

• Accelerating growth in the Hearing division, driven by the successful launches of AI-powered and connectivity-enhanced products like ReSound Vivia and Enzo IA, positions GN Store Nord to capture incremental share from an expanding base of aging consumers, supporting stronger revenue growth and higher gross margins in future quarters.
  
• Increasing adoption of hybrid and remote work models continues to sustain underlying demand for GN's Enterprise communications products, with multi-quarter sell-out growth in North America and APAC indicating a resilient demand baseline that can drive a rebound in revenue and support recurring sales-and operating leverage-when macro and trade headwinds subside.
  
• Ongoing operational changes, including substantial supply chain diversification and effective tariff mitigation, improve flexibility and cost control, setting up gross margin expansion and enhanced net margins as short-term trade disruptions abate.
  
• Group-wide cost optimization and digitalization initiatives have materially lowered sales, marketing, and distribution expenses-yielding strong EBITA growth and margin uplift in Q2-which supports sustained improvement in operating earnings going forward.
  
• Recent refinancing at improved terms will meaningfully reduce financial expenses and interest costs starting in 2026, directly benefiting net income and freeing up capital for innovation and growth investment.

GN Store Nord Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming GN Store Nord's revenue will grow by 4.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from 5.0% today to 8.2% in 3 years time.
• Analysts expect earnings to reach DKK 1.6 billion (and earnings per share of DKK 10.51) by about August 2028, up from DKK 874.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting DKK2.1 billion in earnings, and the most bearish expecting DKK1.1 billion.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.9x on those 2028 earnings, down from 19.4x today. This future PE is lower than the current PE for the GB Consumer Durables industry at 19.3x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.86%, as per the Simply Wall St company report.

GN Store Nord Future Earnings Per Share Growth

Risks

• Prolonged macroeconomic weakness and uncertainty in Europe, coupled with hesitant enterprise investment decisions and strict cost programs at customer companies, may result in persistent soft demand for Enterprise division products, negatively impacting top-line revenue and operating margins in that segment.
  
• Sustained global trade tensions and repeated changes to tariff policies increase input costs for GN Store Nord, with ongoing supply chain relocations and diversification initiatives carrying execution risk-potentially leading to elevated COGS (cost of goods sold) and squeezing net margins, especially if further shocks or geopolitical events arise.
  
• Evidence of ASP (average selling price) pressure in Hearing-where volume growth exceeded value growth due to channel and geographic mix-may indicate rising commoditization and/or competitive pricing dynamics, undermining premium pricing power and risking future profitability for this core segment.
  
• Ongoing volatility and below-trend growth in the global hearing aid market, driven by cyclical consumer sentiment (especially in the US) despite long-term tailwinds, introduce uncertainty around sustainable organic growth for GN Store Nord, which could result in underperformance relative to its sector and dampen group revenue and earnings.
  
• Implementation of significant price increases (around 10%) in Enterprise and Gaming on the US market to offset tariffs is expected to cause some volume declines; if price elasticity is higher than anticipated or macro uncertainties persist, this could result in both revenue contraction and margin dilution, jeopardizing future earnings growth.

Valuation

• The analysts have a consensus price target of DKK140.643 for GN Store Nord 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 DKK270.0, and the most bearish reporting a price target of just DKK82.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be DKK19.6 billion, earnings will come to DKK1.6 billion, and it would be trading on a PE ratio of 15.9x, assuming you use a discount rate of 7.9%.
  
• Given the current share price of DKK116.15, the analyst price target of DKK140.64 is 17.4% 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.