Embracer Group AB (EMBRAC.B) AI Stock Analysis

• Market Cap: kr10.35B
• Dividend Yield: N/A
• Average Volume (3M): 749.02K
• Price to Earnings (P/E): 2.2
• Beta (1Y): 0.81
• Revenue Growth: -46.66%
• EPS Growth: N/A
• Country: SE
• Employees: 7,873
• Sector: Communication Services
• Sector Strength: 97
• Industry: Electronic Gaming & Multimedia
• EPS (TTM): 1.77
• Shares Outstanding: 219,777,970
• 10 Day Avg. Volume: 694,113
• 30 Day Avg. Volume: 749,019
• PEG Ratio: 0.03
• Price to Book (P/B): 3.82
• Price to Sales (P/S): 4.74
• P/FCF Ratio: 378.06
• 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: kr90.00
• Price Target Upside: 72.25% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): 1.38
• Revenue Forecast (FY): kr15.99B

• Rating: 66 Neutral
• Price Target: kr48.00 ▼(-8.13% Downside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is driven by very strong valuation (low P/E and high yield) and a currently conservative balance sheet, offset by weak cash-flow quality (sharp FCF decline and low cash conversion) and a softer technical setup (below key longer-term moving averages with negative MACD).

Positive Factors

Conservative leverage

A debt-to-equity near 0.08 and a 'currently strong and de-risked' balance sheet provide durable financial flexibility. Low leverage reduces interest burden, supports multi-year content investment, and allows the firm to absorb release delays or opportunistic M&A without stressing cash flows.

Large diversified IP/studio portfolio

A broad portfolio of studios and owned IP creates diversified content pipelines and recurring revenue channels (back catalog, DLC, licensing). This structural diversification lowers dependence on single-hit releases and supports more predictable long-term revenue and monetization opportunities.

High reported margins & ROE

Very strong reported gross and net margins alongside ~22.7% ROE suggest pricing power and capital efficiency in publishing and digital distribution. Sustained margins can fund continued studio investment and IP exploitation, bolstering long-term profitability if cash conversion stabilizes.

Negative Factors

Top-line contraction

A nearly 11% TTM revenue decline points to weaker sales momentum or timing gaps in major releases. Persistent top-line shrinkage erodes scale economies, limits reinvestment capacity for content and marketing, and pressures medium-term growth and operational planning.

Weak free cash flow and conversion

FCF plunging ~79% to ~0.18B and representing ~19.9% of net income shows earnings are not converting into cash reliably. Thin, volatile FCF constrains organic funding for game development, limits shareholder returns, and increases reliance on external financing for strategic moves.

Volatile earnings trajectory

Material multi-year volatility and occasional negative profitability raise earnings-quality and comparability risks. That unpredictability complicates forecasting, capital allocation and long-term planning, increasing execution risk for sustaining margins and funding new projects.

Embracer Group AB Business Overview & Revenue Model

Company Description

Embracer Group AB (publ), together with its subsidiaries, develops and publishes PC, console, mobile, VR, and board games for the games market worldwide. The company has a catalogue of approximately 850 owned franchises, such as Saints Row, Goat Simulator, Dead Island, Darksiders, Metro, MX vs ATV, Kingdoms of Amalur, TimeSplitters, Satisfactory, Wreckfest, Insurgency, World War Z, and Borderlands, and others. It also publishes films and comics. It distributes games through retailers and digital distributors. The company was formerly known as THQ Nordic AB (publ) and changed its name to Embracer Group AB (publ) in October 2019. Embracer Group AB (publ) was incorporated in 1999 and is headquartered in Karlstad, Sweden.

How the Company Makes Money

Embracer primarily makes money by creating, publishing, and monetizing video games and related IP. Key revenue streams include: (1) Sales of new games (premium/full-game releases) across PC and console via physical and digital channels, where revenue is recognized from unit sales through platform storefronts and retail partners. (2) Ongoing monetization of released titles through add-on content such as downloadable content (DLC), expansions, season passes, and other post-launch content, generating recurring sales beyond the initial release window. (3) Back-catalog revenue from its large library of previously released games, which can provide durable earnings through continued digital sell-through, periodic discounts, bundles, and re-releases. (4) Licensing and other IP-related income, where Embracer can monetize owned franchises and characters through licensing arrangements (e.g., rights to use IP in other media, products, or collaborations) when applicable. (5) Publishing and distribution activities for internally developed and externally sourced titles, where Embracer may earn revenue as the publisher (or co-publisher) by funding, marketing, and distributing games in exchange for a share of sales. Significant factors influencing earnings typically include the timing and success of major game launches, the performance of live/long-tail monetization for supported titles, the strength of the back catalog, platform economics (storefront fees and revenue shares), and the company’s ability to develop and exploit its IP across games and potential licensing opportunities. Specific material partnerships or deal terms are not available in this response and are therefore null.

Embracer Group AB Financial Statement Overview

Summary

Mixed fundamentals: revenue declined (-10.965%) and cash flow is a clear weakness (FCF down ~79.1% with modest cash conversion vs. earnings), but the latest snapshot shows very strong reported margins and a conservative balance sheet (low debt-to-equity ~0.08). Overall quality is acceptable but uneven due to volatility across periods and weak FCF.

Income Statement

TTM (Trailing-Twelve-Months) revenue declined (-10.965%), but profitability looks very strong on paper with high gross margin (~78.6%) and unusually high net margin (~40.6%). That said, results have been volatile across annual periods, including years showing very weak/negative profitability despite solid revenue levels, suggesting earnings quality and comparability risk. Overall: strong current margins, but an uneven multi-year earnings trajectory and recent top-line contraction keep the score mid-range.

Balance Sheet

Leverage appears conservative in the latest TTM snapshot (debt-to-equity ~0.08) with sizable equity and a solid return on equity (~22.7%). However, the balance sheet has swung materially over time (notably much higher debt levels and higher leverage in prior annual periods), which raises some stability concerns and implies the capital structure has been in transition. Net: currently strong and de-risked, but with historical variability.

Cash Flow

Cash generation is the main weak spot. TTM operating cash flow is positive (~2.68B), but free cash flow is thin (~0.18B) and down sharply (-79.1%), indicating heavy investment, working-capital drag, or weaker cash conversion. Cash conversion vs. earnings is also modest (free cash flow is ~19.9% of net income), suggesting reported profits are not translating proportionally into cash. Overall: positive operating cash flow, but pressured and volatile free cash flow.

Breakdown	TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement
Total Revenue	17.77B	22.37B	42.21B	37.66B	17.04B	9.02B
Gross Profit	13.99B	18.38B	30.78B	27.68B	14.63B	6.70B
EBITDA	12.67B	12.54B	4.70B	12.24B	4.07B	4.26B
Net Income	8.54B	5.96B	-18.18B	4.45B	-4.29B	287.00M
Balance Sheet
Total Assets	34.80B	42.13B	95.70B	116.07B	93.45B	33.75B
Cash, Cash Equivalents and Short-Term Investments	4.88B	7.10B	3.34B	4.68B	5.81B	14.30B
Total Debt	2.51B	2.35B	21.18B	21.75B	20.31B	1.48B
Total Liabilities	8.73B	10.94B	43.21B	51.35B	48.64B	6.59B
Stockholders Equity	26.04B	31.13B	52.42B	64.67B	44.59B	27.15B
Cash Flow
Free Cash Flow	176.00M	-252.00M	529.00M	-1.61B	220.70M	1.69B
Operating Cash Flow	2.68B	3.49B	7.89B	5.38B	4.28B	3.90B
Investing Cash Flow	9.17B	14.02B	-9.95B	-15.49B	-37.89B	-6.80B
Financing Cash Flow	-10.05B	-12.65B	832.00M	8.50B	25.02B	14.73B

Embracer Group AB Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 52.25
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SE:EMBRAC.B, the sentiment is Negative. The current price of 52.25 is above the 20-day moving average (MA) of 49.55, above the 50-day MA of 50.13, and below the 200-day MA of 62.58, indicating a bearish trend. The MACD of -1.72 indicates Positive momentum. The RSI at 35.98 is Neutral, neither overbought nor oversold. The STOCH value of 10.41 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SE:EMBRAC.B.

Embracer Group AB Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EMBRAC.B	66 Neutral	kr10.35B	2.23	10.27%	―	-46.66%	―
PDX	61 Neutral	kr12.38B	136.90	22.69%	3.16%	-18.54%	71.38%
G5EN	61 Neutral	kr416.61M	23.65	12.65%	9.28%	-14.68%	-29.97%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
MTG.B	56 Neutral	kr10.38B	-216.77	-1.61%	―	72.20%	-166.05%
SF	46 Neutral	kr1.85B	-1.37	―	―	-11.82%	-7499.16%
EG7	44 Neutral	kr1.30B	-0.62	―	―	1.74%	-5214.06%

Embracer Group AB Corporate Events

Embracer Tightens Focus on Core IP as Sales Slide but Profitability Improves

Embracer Group reported third-quarter net sales of SEK 5.2 billion, down 26% year-on-year, with sharp declines in mobile games and softer PC/console and entertainment revenues, while adjusted EBIT fell 44% to SEK 528 million and free cash flow turned slightly negative. Despite the headline declines, profitability and cash flow improved versus earlier quarters, supported by strong performance from core IPs such as Kingdom Come: Deliverance II, Dead Island and Tomb Raider.

The company completed the spin-off and listing of Coffee Stain Group, reclassifying it as discontinued operations and trimming its full-year 2025/26 adjusted EBIT forecast to at least SEK 750 million, which represents a modest upgrade on an underlying, like-for-like basis. Management is doubling down on an IP-led strategy, divesting non-strategic and loss-making third-party publishing and work-for-hire assets, and banking on a strengthened pipeline of major and mid-sized releases to drive a profitability and cash-generation inflection in FY 2026/27.

The most recent analyst rating on ($SE:EMBRAC.B) stock is a Buy with a SEK52.00 price target. To see the full list of analyst forecasts on Embracer Group AB stock, see the SE:EMBRAC.B Stock Forecast page.

Embracer Group Sets February 12 Presentation for Q3 2025/26 Results

Embracer Group has invited investors, analysts and media to a presentation of its interim report for the third quarter of fiscal year 2025/26, to be held on 12 February, with the report scheduled for publication that morning and followed by an English-language webcast and conference call led by CEO Phil Rogers and CFO Müge Bouillon. The event, which will include a Q&A session and be available on demand, underscores the firm’s ongoing efforts to maintain transparency with capital markets as it updates stakeholders on its financial performance and operational progress.

The most recent analyst rating on ($SE:EMBRAC.B) stock is a Buy with a SEK90.00 price target. To see the full list of analyst forecasts on Embracer Group AB stock, see the SE:EMBRAC.B Stock Forecast page.

Embracer Names Shareholder-Backed Nomination Committee Ahead of 2026 AGM

Embracer Group AB has appointed a five-member Nomination Committee for its 2026 Annual General Meeting, with representatives from its largest shareholders by voting rights, including Lars Wingefors AB, Savvy Gaming Group, Alecta, SEB Asset Management, and Folksam, and chaired by Per Fredriksson. The committee is tasked with drafting proposals for key AGM decisions such as the Chair of the meeting, Board composition and remuneration, auditor election and pay, and, if needed, principles governing future nomination work, underscoring large institutional owners’ continued influence over Embracer’s governance and long-term strategic oversight.

The most recent analyst rating on ($SE:EMBRAC.B) stock is a Buy with a SEK90.00 price target. To see the full list of analyst forecasts on Embracer Group AB stock, see the SE:EMBRAC.B Stock Forecast page.

Embracer Names Lee Guinchard COO to Steer Shift Toward Fellowship Entertainment

Embracer Group has appointed veteran games and entertainment executive Lee Guinchard as Chief Operating Officer and member of its executive management team, expanding his responsibilities beyond his current roles as CEO of Embracer Freemode and Middle-earth Enterprises. With more than three decades of industry experience and a key role in developing and managing The Lord of the Rings intellectual property, Guinchard is expected to help drive operational execution and guide the group’s transition toward its new strategic identity as Fellowship Entertainment, signaling a tightening of leadership and franchise-focused management across the organization.

The most recent analyst rating on ($SE:EMBRAC.B) stock is a Buy with a SEK90.00 price target. To see the full list of analyst forecasts on Embracer Group AB stock, see the SE:EMBRAC.B Stock Forecast page.