Hiab (HLSE:HIAB) Profit Margin Decline Challenges Quality Growth Narrative in Latest Earnings

Hiab Oyj (HLSE:HIAB) posted a net profit margin of 9.6%, a step down from last year's 11.5%, and reported negative earnings growth this year after averaging 12.4% annual earnings growth over the past five years. With revenue forecast to rise 5.6% per year, outpacing the Finnish market, and earnings projected to grow at 12.1% per year, the company's outlook remains attractive even as growth lags the broader market's 15.1% pace. Despite shrinking margins, Hiab continues to trade at a price-to-earnings ratio below peer and industry averages. Analysts point to a share price that sits below fair value and consensus targets, suggesting the company's combination of quality margins and favorable valuation may be appealing in the current earnings context.

See our full analysis for Hiab Oyj.

Next, we will see how these earnings results compare with the market's prevailing narratives for Hiab. This will spotlight which stories get reinforced, and which might need a rethink.

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Eco Portfolio Surges to 35% of Sales

• Sales from Hiab's Eco product portfolio grew 24% year-over-year and now make up 35% of total sales, shifting the business toward higher-margin, premium offerings.
• Analysts' consensus view sees this surge affirming expectations of sustained top-line growth and improved net margin quality as electrified and low-emission equipment gains wider market acceptance.
  • Consensus narrative highlights how stronger demand for higher-value eco products is likely to boost long-term profitability and revenue stability. This reinforces current growth forecasts anchored by the shift in Hiab's sales mix.
  • Steady improvements in recurring high-margin service contracts, with 20,000 now in place, further support the case that recent investments in connected platforms will continue to drive margins higher.
• For a deeper dive into how Hiab's eco shift and recurring revenue story fit into a broader industry view, see the full Consensus Narrative.📊 Read the full Hiab Oyj Consensus Narrative.

Share Price Trades Below DCF Fair Value

• Hiab’s share price of €44.62 sits below both its DCF fair value of €52.21 and the analyst price target of €56.33. It is also trading at a price-to-earnings ratio of 18.5x, a discount to both the peer group (20.7x) and European Machinery industry (19.9x).
• According to analysts' consensus, this valuation gap supports a favorable outlook for new investors. Expectations that further profit margin expansion (consensus sees a 9.6% margin today rising to 12.4% over three years) should help close the price gap with targets.
  • Consensus narrative notes that the current 12.3% upside to the price target offers a relative value opportunity. This reflects a path for the shares to converge with peer and industry multiples if margin progress continues.
  • However, the sustainability of this value depends on Hiab’s ability to execute efficiency projects and capitalize on favorable industry trends without margin slippage from cost inflation or order volatility.

Regional Order Weakness a Watch Point

• Americas order intake fell 20% and the order book slid 22% year-over-year, revealing pressure in historically high-margin segments as trade headwinds and supply challenges bite.
• Analysts' consensus narrative contends this drop could threaten revenue visibility and near-term margin stability, especially since regional concentration exposes the company to market-specific headwinds.
  • Analysts highlight that softening US demand, combined with delays in purchasing decisions tied to inflation and rates, poses an ongoing risk to forecasted sales and earnings momentum.
  • Consensus still anticipates overall company profit margins to improve, but stresses that regional softness must reverse or be offset elsewhere to realize the full margin gains embedded in future growth targets.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Hiab Oyj on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your Hiab Oyj research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

See What Else Is Out There

Hiab’s regional order intake weakness and margin pressure suggest that its growth path could be disrupted by volatility in key markets and demand uncertainty.

If you want to sidestep these swings, focus on companies with stronger consistency by seeking out stable growth stocks screener (2098 results) that deliver reliable growth regardless of market ups and downs.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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