Husqvarna (OM:HUSQ B): Assessing Valuation Following Factory Closure Plans and Profitability Shift

Husqvarna (OM:HUSQ B) recently announced plans to close its Brastad factory as part of a shift toward a more flexible and asset-light business model, aiming for significant cost savings in the process.

See our latest analysis for Husqvarna.

The Brastad factory closure comes shortly after Husqvarna’s latest quarterly earnings, which showed narrowing losses even as sales dipped. Despite these moves to streamline and cut costs, sentiment has yet to turn, with a year-to-date share price return of -21.9% and the one-year total shareholder return lagging at -32.3%. Momentum has clearly been fading, but management’s ongoing reforms may be laying the groundwork for a more resilient business in the future.

If this pivot toward efficiency has you thinking more broadly about innovation and value, now could be the right time to discover fast growing stocks with high insider ownership

With shares deeply in the red and fresh cost-saving measures on the table, the question now is whether Husqvarna’s current valuation reflects its true potential, or if this is an overlooked buying opportunity waiting to be seized.

Most Popular Narrative: 22.2% Undervalued

With Husqvarna's fair value pegged at SEK 58.25, investors are watching the last close at SEK 45.3 and weighing what drives the sizeable gap. The narrative blends optimism about innovative segments with caution over persistent headwinds, setting up a rich debate about the stock’s longer-term prospects.

The accelerating transition towards battery-powered, electric, and especially robotic outdoor equipment is expanding Husqvarna's addressable market and supporting double-digit sales growth in robotics and electrified categories. This is expected to drive above-average revenue growth and higher net margins as a greater share of sales comes from higher-ASP, lower-servicing products. Growing environmental consciousness and tightening emissions regulations are pushing professional and municipal customers to adopt sustainable solutions. Husqvarna continues to lead through innovation in this area, resulting in rapid market share gains in pro robotic mowers and watering products. This is likely to translate into recurring revenue and improved earnings quality.

Read the complete narrative.

Want to unpack how this upbeat vision translates into the sharp valuation gap? The market story hinges on high-margin growth, recurring revenues, and bold future profit assumptions. Wondering what breakthrough financial forecasts drive this target? Dive in to uncover the numbers that could change everything.

Result: Fair Value of SEK 58.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing pricing pressure and persistent weak North American demand could hinder Husqvarna’s path to margin improvement and sustainable growth.

Find out about the key risks to this Husqvarna narrative.

Build Your Own Husqvarna Narrative

If you see the story differently or want to dig into the numbers yourself, it’s easy to craft your own view in just a few minutes. Do it your way

A great starting point for your Husqvarna research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Looking for More Smart Investment Ideas?

Don’t let your strategy stop with Husqvarna. Expand your horizon and uncover fresh, actionable opportunities using these powerful screeners from Simply Wall Street:

• Tap into tomorrow’s healthcare by checking out these 33 healthcare AI stocks, which aims to transform patient care and diagnostics with breakthrough artificial intelligence innovations.
• Unlock steady income potential by reviewing these 23 dividend stocks with yields > 3%, delivering yields above 3% for investors seeking strong, reliable cash flow from their portfolios.
• Jump on fast-moving tech trends and see which companies are making waves among these 26 AI penny stocks as artificial intelligence reshapes industries and drives new growth.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com