Henkel AG & Co. KGaA (HEN3) AI Stock Analysis

• Market Cap: €27.60B
• Dividend Yield: 2.92%
• Average Volume (3M): 399.64K
• Price to Earnings (P/E): 14.2
• Beta (1Y): 0.58
• Revenue Growth: -1.06%
• EPS Growth: 17.22%
• Country: DE
• Employees: 47,150
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Household & Personal Products
• EPS (TTM): 1.26
• Shares Outstanding: 178,162,870
• 10 Day Avg. Volume: 338,181
• 30 Day Avg. Volume: 399,644
• PEG Ratio: 5.21
• Price to Book (P/B): 1.41
• Price to Sales (P/S): 1.41
• P/FCF Ratio: 15.81
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €76.73
• Price Target Upside: 9.49% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 12
• EPS Forecast (FY): 5.55
• Revenue Forecast (FY): €20.67B

• Rating: 64 Neutral
• Price Target: €76.00 ▲(8.45% Upside)
• Action: Downgraded Date: 03/13/26
• Date: Action: Downgraded 03/13/26

The score is driven primarily by improving profitability and a conservatively levered balance sheet, supported by reasonable valuation (P/E ~14.17 and ~2.87% dividend yield). These positives are meaningfully offset by weak technicals, with the price below key moving averages and bearish/oversold momentum signals.

Positive Factors

Improving profitability and margins

Material margin expansion to ~51.1% gross and ~14.6% operating in 2025 indicates stronger cost control and pricing power. Higher structural margins improve resilience to input shocks, enable reinvestment in R&D/brands, and sustainably support returns and cash available for stakeholders.

Conservative balance sheet and low leverage

Low debt-to-equity (~0.18) provides durable financial flexibility to fund capex, M&A, or dividends without stressing liquidity. Conservative leverage reduces bankruptcy risk in downturns and preserves capacity to pursue strategic investments or weather cyclical weakness in end markets.

Strong absolute cash generation and FCF coverage

Healthy operating cash (~€2.5B) and FCF (~€1.8B) with FCF covering ~72% of net income indicate the business reliably converts profits into cash. This supports sustainable dividends, deleveraging, and funding of strategic initiatives without immediate reliance on external financing.

Negative Factors

Weakening top-line growth

A ~3.2% revenue decline in 2025 after prior weakness signals persistent demand or market-share challenges. Structural top-line erosion limits long-term operating leverage, constrains reinvestment capacity, and raises reliance on cost cuts to sustain profit growth rather than organic volume or pricing momentum.

Softening cash conversion and falling free cash flow

An ~11.4% drop in FCF and OCF-to-revenue slipping to ~12% point to weaker working-capital or operating efficiency. Persistent deterioration in cash conversion reduces buffers for capital allocation, limits flexibility for M&A or buybacks, and raises vulnerability to cost or interest shocks.

M&A activity creates execution and integration risk

Pursuing acquisitions like the reported Olaplex bid is strategically meaningful but creates structural risk: integration, cultural fit, and execution can strain management bandwidth and cash. If financed from resources or debt, deals may alter capital allocation and pressure margins over multiple quarters.

Henkel AG & Co. KGaA Business Overview & Revenue Model

Company Description

Henkel AG & Co. KGaA, together with its subsidiaries, engages in the adhesive technologies, beauty care, and laundry and home care businesses worldwide. The company's Adhesive Technologies segment offers adhesives, sealants, and functional coatings for various business areas, including packaging and consumer goods; automotive and metals; electronics and industrials; and craftsmen, construction, and professional industries. This segment markets its products primarily under the Loctite, Technomelt, Bonderite, Teroson, and Aquence brands. Its Beauty Care segment provides hair cosmetics; and body, skin, and oral care products, as well as operates professional hair salons. This segment distributes its products through brick-and-mortar stores, hair salons, third-party online platforms, and direct-to-consumer channels primarily under the Schwarzkopf, Dial, and Syoss brands. The company's Laundry & Home Care segment offers heavy-duty and specialty detergents, fabric softeners, laundry performance enhancers, and other fabric care products; hand and automatic dishwashing products; cleaners for bathroom and WC applications; household, glass, and specialty cleaners; and air fresheners and insect control products for household applications. This segment markets its products primarily under the Persil, Bref, Purex, all, and other brands. Henkel AG & Co. KGaA was founded in 1876 and is headquartered in Düsseldorf, Germany.

How the Company Makes Money

Henkel makes money by selling products and solutions across two main revenue streams. (1) Adhesive Technologies: Henkel generates revenue from the sale of industrial and professional-grade adhesives, sealants, and functional coatings to business customers. These products are used in a wide range of end markets and applications, and revenues are driven by customer demand, volumes sold, and pricing/mix across product portfolios. Sales in this segment are typically business-to-business and depend on long-term customer relationships, application expertise, and the ability to supply consistent performance at scale. (2) Consumer Brands: Henkel generates revenue from selling branded consumer products in categories such as laundry and home care and hair-related care, primarily through retailers and e-commerce as well as professional channels (e.g., hair salon-related offerings where applicable). Revenue in this segment depends on brand strength, product innovation, distribution reach, promotional activity, and pricing. Across both segments, profitability and earnings are influenced by factors such as raw material and packaging costs, manufacturing and logistics efficiency, marketing and selling expenses, and foreign exchange movements. Specific details on significant partnerships: null.

Henkel AG & Co. KGaA Financial Statement Overview

Summary

Fundamentals are stable-to-good: profitability improved materially (gross margin ~51.1% and operating margin ~14.6% in 2025), and leverage is conservative (debt-to-equity ~0.18). Offsets are a weaker top-line trend (revenue down ~3.2% in 2025) and softening cash-flow momentum (FCF down ~11.4% in 2025; lower OCF-to-revenue).

Income Statement

Profitability trends are solid and improving: 2025 gross margin rose to ~51.1% (from ~45.7% in 2023) and operating margin improved to ~14.6% (from ~9.8% in 2023), supporting a higher net margin of ~9.9%. The key weakness is the top-line trajectory—revenue declined ~3.2% in 2025 after being roughly flat in 2024 and down in 2023, suggesting limited volume/price growth momentum despite better cost discipline.

Balance Sheet

Balance sheet leverage looks conservative, with debt-to-equity around ~0.18 in 2025 (generally ~0.14–0.20 across the period), providing financial flexibility and reducing downside risk. Returns have also improved, with return on equity rising to ~9.9% in 2025 from ~6.6% in 2023. A watch item is that equity and assets both stepped down in 2025 versus 2024, and returns are good but not standout for the sector.

Cash Flow

Cash generation remains healthy in absolute terms (2025 operating cash flow ~€2.5B; free cash flow ~€1.8B), and free cash flow continues to cover a substantial portion of earnings (about ~72% of net income in 2025). However, cash flow has softened recently—free cash flow fell ~11.4% in 2025 (after a small decline in 2024), and operating cash flow as a share of revenue was lower in 2025 (~12%) than 2024 (~14%) and 2023 (~15%), pointing to less favorable working-capital/operating cash conversion.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	20.50B	21.59B	21.51B	22.40B	20.07B
Gross Profit	10.47B	10.82B	9.84B	9.47B	9.07B
EBITDA	3.65B	3.68B	2.80B	2.59B	2.95B
Net Income	2.04B	2.01B	1.32B	1.26B	1.63B
Balance Sheet
Total Assets	33.35B	35.27B	31.73B	33.18B	32.67B
Cash, Cash Equivalents and Short-Term Investments	3.11B	3.53B	2.17B	1.33B	2.46B
Total Debt	3.71B	4.29B	2.89B	3.59B	2.96B
Total Liabilities	12.77B	13.45B	11.73B	13.02B	12.88B
Stockholders Equity	20.49B	21.73B	19.92B	20.08B	20.80B
Cash Flow
Free Cash Flow	1.82B	2.49B	2.65B	598.00M	1.49B
Operating Cash Flow	2.52B	3.12B	3.25B	1.19B	2.14B
Investing Cash Flow	-401.00M	-2.33B	-684.00M	-323.00M	-479.00M
Financing Cash Flow	-2.18B	171.00M	-1.65B	-1.73B	-1.29B

Henkel AG & Co. KGaA Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 70.08
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DE:HEN3, the sentiment is Negative. The current price of 70.08 is below the 20-day moving average (MA) of 78.70, below the 50-day MA of 75.97, and below the 200-day MA of 71.48, indicating a bearish trend. The MACD of -1.82 indicates Positive momentum. The RSI at 26.25 is Positive, neither overbought nor oversold. The STOCH value of 11.53 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DE:HEN3.

Henkel AG & Co. KGaA Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BEI	69 Neutral	€17.15B	21.99	10.44%	1.08%	1.83%	21.36%
HEN3	64 Neutral	€27.60B	14.17	10.04%	2.92%	-1.06%	17.22%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
SY1	58 Neutral	€10.31B	38.70	13.57%	1.75%	2.15%	29.19%