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Epiroc AB (EPOAY)
OTHER OTC:EPOAY
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Epiroc AB
(OTC:EPOAY)
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Rating:69Neutral
Price Target:
$28.00
▲(24.83% Upside)
Action:ReiteratedDate:01/29/26
Score is driven primarily by strong profitability and cash generation, supported by constructive earnings-call guidance and solid order/margin resilience. The main offsets are expensive valuation (high P/E, low yield) and stretched technical conditions (very high RSI/Stoch) despite an intact uptrend.
Positive Factors
High and stable margins
Sustained adjusted operating margins near 19.6% show durable profitability and operational discipline. Margin resilience provides internal funding for capex and R&D, supports free cash flow generation through cycles, and cushions the business against commodity and currency swings over the next 2–6 months.
Large recurring aftermarket revenue
A 63% share of revenue from aftermarket and services creates steady, higher‑margin, recurring cash flows less tied to capital spending cycles. This installed‑base exposure supports resilience when equipment orders ebb and underpins steady FCF, working capital conversion and predictable servicing demand.
Leadership in automation and electrification
Large contracts and scale in BEV/autonomy demonstrate a structural competitive advantage. Technology leadership creates higher‑value equipment, recurring software/aftermarket revenue and stickier customer relationships, supporting longer‑term market share gains as miners electrify and automate operations.
Negative Factors
Revenue decline in 2025
A year‑over‑year revenue decline signals cyclical exposure and weaker end‑market activity (notably construction/attachments). Lower top‑line momentum strains fixed‑cost leverage, can slow working capital conversion, and limits room to invest or absorb cost shocks if the recovery in equipment orders falters.
Higher leverage versus prior years
Increased leverage reduces financial flexibility compared with earlier years, constraining the company’s ability to fund bolt‑on M&A or aggressively ramp capex during downturns. Even with moderate net debt/EBITDA, higher debt amplifies risk if cash flow generation weakens amid cyclical softness.
Materials cost and tariff headwinds
Sharp input cost increases (notably tungsten) and persistent tariffs pose structural margin pressure for Tools & Attachments and aftermarket. Mitigation (recycling, pricing actions) may be partial and phased, leaving a sustained risk to margins and service profitability over the coming quarters.
Epiroc AB (EPOAY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$29.50B
Dividend YieldN/A
Average Volume (3M)961.00
Price to Earnings (P/E)27.3
Beta (1Y)1.01
Revenue Growth6.01%
EPS Growth3.48%
CountryUS
Employees19,067
SectorIndustrials
Sector Strength72
IndustryAgricultural - Machinery
Share Statistics
EPS (TTM)0.21
Shares Outstanding823,766,000
10 Day Avg. Volume0
30 Day Avg. Volume961
Financial Highlights & Ratios
PEG Ratio-4.16
Price to Book (P/B)5.95
Price to Sales (P/S)4.31
P/FCF Ratio29.75
Enterprise Value/Market Cap10.15
Enterprise Value/Revenue4.90
Enterprise Value/Gross Profit13.21
Enterprise Value/Ebitda20.22
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.88
Revenue Forecast (FY)$7.10B
Epiroc AB Business Overview & Revenue Model
Company DescriptionEpiroc AB (publ), together with its subsidiaries, develops and produces equipment for use in surface and underground applications in North America, Europe, South America, Europe, Africa, the Middle East, Asia, Australia, and India. It operates in two segments, Equipment & Service, and Tools & Attachments. The Equipment & Service segment provides equipment and solutions for rock drilling, rock excavation, rock reinforcement, loading and haulage, and ventilation systems, as well as drilling equipment for exploration, and water and energy; and related spare parts and services for the mining and infrastructure industries. This segment offers solutions for automation, digitalization, and electrification. The Tools & Attachments segment provides consumables for rock drilling, such as drill bits and drill rods, as well as tools for exploration drilling and rock reinforcement; ground engaging tools, such as cast lips, teeth, and protective shrouds, as well as digital solutions for the mining industry; and hydraulic attachments, including hydraulic breakers, shears and pulverizers, concrete cutters and busters, drum cutters, excavator grapples, excavator magnets, hydraulic compactors, crusher and screening buckets, auger drive units, and couplers and thumbs. In addition, the company offers aftermarket services, including new circular services, productivity-enhancing technology-agnostic digital solutions, mid-life upgrades, diesel-to-battery conversions, and remanufacturing of components. The company was founded in 1873 and is headquartered in Nacka, Sweden.
How the Company Makes MoneyEpiroc primarily makes money by selling capital equipment and by generating recurring aftermarket revenue tied to its installed base. A major revenue stream is the sale of mining and infrastructure equipment (e.g., drilling rigs, underground loaders and trucks, rock reinforcement and related rock excavation systems) to mining companies and contractors; these are typically larger, project- and cycle-dependent purchases. A second, typically more recurring stream comes from aftermarket: spare parts, consumables, wear items, rebuilds, maintenance contracts, and field service that customers need to keep machines operating, which can provide steadier demand across commodity and construction cycles. Epiroc also earns revenue from rock drilling tools and hydraulic attachment tools used in construction and demolition, which are sold both as new products and through replacement/consumable demand. In addition, Epiroc monetizes technology and productivity offerings—such as automation, digital solutions, and fleet/operations software—through bundled sales with equipment and through service and subscription-style arrangements where applicable. Customer financing solutions may also support equipment sales, though the extent and structure of financing-related income is null.
Epiroc AB Earnings Call Summary
Earnings Call Date:Jan 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Positive
The call presents a solid operational and financial performance with notable wins in automation, electrification and strong organic equipment and service growth (full‑year orders +7% organically; Q4 equipment orders +22% organically). Profitability has been defended well (adjusted operating margin ~19.6%) while the balance sheet and cash generation strengthened (net debt down, strong cash conversion). Headwinds from currency, tariffs and rising input costs (notably tungsten) and persistent weakness in construction/attachments and nickel‑exposed service demand are meaningful but appear manageable given active mitigation steps, efficiency programs and strong market positioning. Overall, highlights around innovation, large contract wins, improved cash and margin recovery outweigh the material but addressable lowlights.Q4-2025 Updates
Positive Updates
Organic Order and Revenue Growth (Full Year 2025)
Orders grew organically by 7% to SEK 63.0 billion and revenues increased 2% to SEK 62.0 billion for the full year, demonstrating underlying demand resilience despite currency and tariff headwinds.
Very Strong Q4 Equipment Momentum
Q4 orders grew organically 11% (almost SEK 16 billion) with equipment orders up 22% organically, signaling strong near-term mining equipment demand and robust exploration activity.
High Profitability and Margin Resilience
Adjusted operating margin for the full year was 19.6% (19.8% prior year). Q4 adjusted operating margin was 19.6% (19.7% prior year) and reported operating margin was 19.9% in Q4, showing ability to protect profitability amid headwinds.
Record Large Order and Electrification Wins
Won the largest contract in company history — SEK 2.2 billion over 5 years to deliver ~50 fully autonomous electric surface blasthole rigs to Fortescue — underscoring leadership in automation and electrification.
Significant Automation and BEV Deployments
Completed Roy Hill conversion to an OEM‑agnostic autonomous mine (78 haul trucks and ~250 ancillary vehicles) and reached >3,900 driverless machines (up 13% vs 2024). 40 mines ordered battery-electric vehicles; electrification revenues were 3.8% of group revenues.
Tools & Attachment Profit Improvement
Tools & Attachment revenues were SEK 3.7 billion (organic +4%) and operating profit rose 65% to SEK 537 million, with adjusted margin improving to 12.3% from 8.4% a year earlier, driven mainly by efficiency and footprint consolidations.
Improved Balance Sheet and Cash Generation
Net debt decreased to SEK 11.0 billion from SEK 14.8 billion; net debt/EBITDA improved to 0.73 from 0.93. Q4 operating cash flow was SEK 2.6 billion and 12‑month cash conversion remained strong at 90%. Cash position SEK 9.6 billion.
Operational and Safety Progress
Total recordable injury frequency rate fell to 3.9 from 4.3 year-over-year. Net working capital as a percentage of revenues improved to 36.9% from 37.4% over 12 months, reflecting better working capital efficiency.
Customer Outcomes from Electrification and Trolley Solutions
Boliden Rävliden 5 km battery trolley project: productivity +23%, ramp speed +50%, maintenance costs -25%, diesel consumption -80%. Assmang BEV fleet delivered +11% tonnes/hour and -18% energy cost — real-world productivity and sustainability benefits.
Negative Updates
Currency Headwinds
Currency reduced reported revenues significantly: Q4 group revenues fell 7% to SEK 16.1 billion, with a negative currency impact of ~11% on revenues and similar negative effects on orders in certain areas (e.g., -12% on Equipment & Service orders including currency).
Tariff Impact on Margins
Tariffs negatively impacted operating margin by just below 0.5 percentage points in Q4 and remain a headwind into 2026, contributing materially to margin pressure despite mitigation efforts.
Materials Cost Risk — Tungsten/Carbide
Tungsten prices more than doubled in 2025. Management expects a margin headwind in 2026 for Tools & Attachment of 'a few tens of percentage points' without full mitigation; the company is accelerating recycling and working with suppliers/customers on pricing.
Weak Construction/Attachment Demand
Attachments used in construction remained weak and seasonally low (Q4 historically weak), constraining Tools & Attachment top-line growth despite recovery signs and end of distributor destocking late in the year.
Commodity-Specific Softness — Nickel Exposure
Nickel remained soft through Q4 with many nickel‑exposed mines in care & maintenance, reducing aftermarket/service demand; recovery depends on sustained higher nickel prices and reactivation of operations.
Profitability and ROCE Slightly Weaker
Return on capital employed fell to 18.9% from 20.6% (rolling 12‑month) driven by higher intangible assets and somewhat lower profit. Some business-area margins (e.g., Equipment & Service adjusted EBIT margin 22.1% vs 23.6% prior) declined year-over-year.
Working Capital and Inventory Build (Ex-Currency)
Net working capital decreased in reported terms to SEK 22 billion (down 9%), but excluding currency effects inventories increased somewhat, indicating some inventory build that will require conversion to cash as demand continues.
Company Guidance
The management provided clear near‑term guidance: they expect mining demand to remain high while construction demand should increase somewhat from a low level, and tariff headwinds that subtracted just below 0.5 percentage points from Q4 operating margin will persist into 2026 but decline quarter‑by‑quarter; tax guidance is an effective rate of 22–24%; adjusted operating margin was 19.6% (Q4 and FY 2025) and management expects margin improvement from ongoing efficiency actions (more detail to be given at the CMD on June 8–9); orders grew organically 7% in 2025 to SEK 63bn (Q4 organic +11% to ~SEK 16bn) with equipment orders up 22% and large mining orders of SEK 670m in Q4, service (41% of revenues) grew organically 4% in Q4 (management aims to return toward historical ~8% p.a.), aftermarket was 63% of revenues, electrification was 3.8% of group revenues, and capital allocation priorities for 2026 are continued organic investment, bolt‑on M&A, and a proposed ordinary dividend of SEK 3.80/share (SEK 4.6bn, ~53% of net profit); balance sheet metrics include net debt SEK 11bn, cash SEK 9.6bn, net debt/EBITDA 0.73, operating cash flow SEK 2.6bn and 12‑month cash conversion ~90%, with net working capital at SEK 22bn (36.9% of revenues) providing room to pursue these plans.Epiroc AB Financial Statement Overview
Summary
Strong and consistent profitability (gross margin ~36–39%, EBIT margin ~19–23%) and healthy, consistently positive free cash flow. Offsetting this, revenue turned down in 2025, net margins eased versus earlier highs, and leverage is higher than 2021–2023 levels, reducing flexibility if softness persists.Income Statement
Profitability is strong and consistent, with gross margin holding around ~36–39% and EBIT margin staying near ~19–23% across the period. However, growth has become a clear headwind: revenue shifted from strong expansion in 2021–2023 to a decline in 2025 (following modest growth in 2024), and net margin has eased from the 2021–2022 highs to ~13–14% in 2024–2025.78
Positive
Balance Sheet
The balance sheet looks solid with moderate leverage (debt running at roughly ~0.50x equity in 2024–2025) and strong profitability on equity (about ~19–26% over the period). The main weakness is that leverage has increased versus 2021–2023 levels (when debt-to-equity was closer to ~0.33–0.37), reducing financial flexibility if the softer revenue environment persists.74
Positive
Cash Flow
Cash generation is healthy, with free cash flow consistently positive and generally covering a large share of net income (~76–88% historically; ~82% in 2024 and ~82% in 2025). That said, cash flow momentum has weakened: free cash flow declined in 2025 (after a small increase in 2024), and operating cash flow covers only about ~54–57% of total debt in 2024–2025, which is adequate but not especially conservative given the recent revenue decline.70
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 58.28B | 63.60B | 60.34B | 49.69B | 39.65B |
| Gross Profit | 21.60B | 22.95B | 23.15B | 19.02B | 15.45B |
| EBITDA | 14.11B | 15.83B | 15.85B | 13.07B | 9.94B |
| Net Income | 8.09B | 8.73B | 9.43B | 8.40B | 7.06B |
Balance Sheet | |||||
| Total Assets | 80.38B | 83.59B | 67.78B | 61.78B | 48.58B |
| Cash, Cash Equivalents and Short-Term Investments | 10.94B | 7.18B | 6.40B | 7.33B | 10.79B |
| Total Debt | 21.02B | 21.57B | 13.56B | 10.74B | 9.18B |
| Total Liabilities | 38.11B | 40.41B | 30.57B | 28.27B | 22.80B |
| Stockholders Equity | 42.26B | 42.76B | 36.82B | 33.02B | 25.73B |
Cash Flow | |||||
| Free Cash Flow | 8.45B | 8.60B | 5.46B | 4.54B | 6.68B |
| Operating Cash Flow | 10.37B | 10.46B | 7.14B | 5.56B | 7.61B |
| Investing Cash Flow | -2.77B | -11.69B | -5.24B | -5.99B | -3.47B |
| Financing Cash Flow | -4.95B | 1.90B | -2.64B | -3.23B | -8.44B |
Epiroc AB Technical Analysis
Neutral
22.43
Price Trends
27.10
Negative
24.47
Positive
22.96
Positive
Market Momentum
-0.42
Positive
36.30
Neutral
15.40
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For EPOAY, the sentiment is Neutral. The current price of 22.43 is below the 20-day moving average (MA) of 28.04, below the 50-day MA of 27.10, and below the 200-day MA of 22.96, indicating a neutral trend. The MACD of -0.42 indicates Positive momentum. The RSI at 36.30 is Neutral, neither overbought nor oversold. The STOCH value of 15.40 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for EPOAY.
Epiroc AB Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $325.60B | 30.12 | 45.10% | 0.98% | -1.51% | -9.69% | |
73 Outperform | $154.63B | 54.83 | 18.93% | 1.34% | -11.66% | -27.80% | |
72 Outperform | $60.81B | 24.25 | 12.57% | 3.83% | -15.29% | -42.93% | |
69 Neutral | $29.50B | 27.31 | 21.07% | ― | 6.01% | 3.48% | |
66 Neutral | $9.24B | 12.46 | 14.57% | 1.56% | -2.28% | -0.53% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
59 Neutral | $13.05B | 22.56 | 6.58% | 2.67% | -18.10% | -65.24% |
* Industrials Sector Average
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.