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Essity Aktiebolag (SE:ESSITY.A)
:ESSITY.A
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Essity Aktiebolag
(ESSITY.A)
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Rating:65Neutral
Price Target:
kr309.00
▲(18.39% Upside)
Action:UpgradedDate:01/26/26
The score is driven primarily by improved profitability and a notably stronger balance sheet, supported by reasonable valuation and a constructive (but not risk-free) earnings outlook. These positives are tempered by weak technical momentum and ongoing questions around revenue contraction, earnings volatility, and near-term volume/price tradeoffs.
Positive Factors
Balance sheet strength
Reported zero debt in 2025 and sharply reduced leverage materially increase financial flexibility. This durable strength lowers refinancing risk, supports continued buybacks/dividend policy, funds the SEK 8.0–8.5bn CapEx plan and gives capacity for selective M&A or reinvestment without stressing liquidity.
Sustained margin improvement
Meaningful operating and gross margin expansion reflects better pricing and cost control plus realized COGS tailwinds. Higher structural margins support more resilient cash flow and returns, enabling reinvestment and shareholder distributions even if top-line growth remains uneven.
Stronger market position via acquisition
Doubling U.S. Personal Care scale through the Edgewell acquisition materially improves category exposure and distribution in a high-yield market. Greater scale and stronger branded positions enhance pricing power, cross-sell opportunities and long-term revenue diversification versus dependence on a shrinking organic top line.
Negative Factors
Persistent revenue contraction
Multi-year revenue decline erodes operating leverage and raises reliance on cost savings and deals to offset organic weakness. Persistent top-line pressure makes sustainable margin and earnings growth harder, increasing execution dependence on pricing, A&P reinvestment and M&A to restore volume.
Moderate cash conversion and earnings volatility
Free cash flow roughly half of net income indicates earnings do not fully convert to cash, limiting internal funding for growth and distributions. Coupled with volatile net profit year-to-year, this reduces predictability of capital returns and increases reliance on balance sheet levers during downturns.
Execution risk from competitive pressure
Losing private-label contracts and recent volume declines signal intensified price competition and retailer pressure. Restoring volumes requires sustained A&P and selective price action, increasing near-term execution risk and the possibility that margin recovery relies on repeatable, hard-to-forecast commercial wins.
Essity Aktiebolag (ESSITY.A) vs. iShares MSCI Sweden ETF (EWD)
Market Cap
kr191.03B
Dividend Yield3.14%
Average Volume (3M)25.39K
Price to Earnings (P/E)15.7
Beta (1Y)0.22
Revenue Growth-1.91%
EPS Growth-40.37%
CountrySE
Employees36,000
SectorGeneral
Sector StrengthN/A
IndustryHousehold & Personal Products
Share Statistics
EPS (TTM)4.69
Shares Outstanding57,200,657
10 Day Avg. Volume13,063
30 Day Avg. Volume25,387
Financial Highlights & Ratios
PEG Ratio-0.38
Price to Book (P/B)2.13
Price to Sales (P/S)1.32
P/FCF Ratio21.83
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)19.65
Revenue Forecast (FY)kr137.27B
Essity Aktiebolag Business Overview & Revenue Model
Company DescriptionEssity AB (publ) develops, produces, and sells hygiene and health products and services worldwide. It offers health and medical products, including incontinence products, wound care, compression therapy, orthopedics, skincare products, and digital solutions with sensor technology. It operates in Personal Care, Consumer Tissue, Professional Hygiene, and Other segments. The company also provides consumer goods, such as incontinence products, pads, diapers, wet wipes, skincare products, intimate soaps, washable absorbent underwear, menstrual cups, toilet papers, household towels, handkerchiefs, facial tissues, and napkins; and professional hygiene products that consist of toilet papers, paper hand towels, napkins, hand soaps, hand lotions, hand sanitizers, dispensers, and cleaning and wiping products. In addition, it offers digital solutions, such as Internet of Things sensor technology enabling data-driven cleaning, as well as related service and maintenance to companies and office buildings, universities, healthcare facilities, industries, restaurants, hotels, stadiums, and other public venues. The company markets its health and medical products under the TENA, Leukoplast, Cutimed, JOBST, Actimove, and Delta-Castbrands brands through pharmacies, medical devices stores, hospitals, distributors, and care institutions, as well as e-commerce; consumer goods products under the Libero, Libresse, Nosotras, Saba, TOM Organic, Lotus, Regio, Tempo, and Vinda brands through retail trade and online; and professional hygiene products under the TORK brand through distributors and online. It serves in Europe, North America, Latin America, Asia, and internationally. Essity AB (publ) was founded in 1849 and is headquartered in Stockholm, Sweden.
How the Company Makes MoneyEssity generates revenue primarily through the sale of its diverse product lines in personal care, consumer tissue, and professional hygiene. The company operates under well-known brands such as Tena, Libero, and Tempo, which contribute significantly to its sales. Key revenue streams include direct sales to consumers through retail channels, sales to healthcare institutions, and business-to-business partnerships. Additionally, Essity invests in sustainability and innovation, which enhances its product offerings and market competitiveness. Strategic partnerships with suppliers and distributors also play a crucial role in expanding its market reach and driving revenue growth.
Essity Aktiebolag Earnings Call Summary
Earnings Call Date:Jan 22, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 23, 2026
Earnings Call Sentiment Positive
The call presented multiple clear strengths: year‑end margin expansion, record-level product superiority and market share gains across many categories, continued Medical segment momentum, a strategic U.S. acquisition, strong cash generation, and a healthy balance sheet (net debt/EBITDA ~1.0). Offsetting these positives were near-term commercial challenges: a negative organic sales development in Q4 driven by price/mix decisions and volume weaknesses in Baby, Consumer Tissue and Professional Hygiene, some one-off rebate impacts in Latin America, lost private‑label contracts, and upfront restructuring costs tied to the cost‑save program. Management stressed a deliberate plan to reinvest savings into A&P and selective price adjustments to restore volume growth, but acknowledged short-term margin phasing risk. On balance, the positive operational and financial momentum, strategic moves and strong balance sheet outweigh the near-term trading headwinds and execution risks.Q4-2025 Updates
Positive Updates
Full-Year Organic Sales Growth and EPS (2025)
Full-year organic sales growth of 0.9% for 2025; reported EPS roughly +1% nominally vs 2024 and ~+8% in comparable currencies, consistent with long-term growth (~6%).
Strong Margin and Profitability Improvement
Operating margin reached 14.1% (second highest historically outside pandemic levels); gross profit margin improved ~180 basis points year-over-year in Q4.
Market Share Gains Across Categories
Branded market shares strengthened in >65% of the business overall; Feminine Care market share grew in 80% of its business and reached 62% market share in Mexico; Incontinence Care and other strategic segments showed strong growth.
Consistent Health & Medical Momentum and Innovation
Medical business grew for the 19th consecutive quarter, with growth across all three therapy areas; product upgrades and relaunches (e.g., upgraded TENA Flex and Cutimed Siltec Sorbact relaunch) support improved patient outcomes and sales.
Acquisition to Expand U.S. Personal Care
Acquired Edgewell Feminine Care business in North America (brands Carefree, Stayfree, Playtex), more than doubling Personal Care sales in the U.S. and strengthening exposure to high-yield categories.
COGS Tailwind and Realized Cost Savings
Q4 benefited from a SEK ~749 million COGS tailwind (majority from raw materials, ~2/3, with remainder from energy); realized COGS savings just above SEK 500 million within the target SEK 500m–1bn range.
Strong Cash Flow and Balance Sheet Metrics
Solid operating cash surplus and working capital management led to strong net cash flow; net debt/EBITDA approximately 1.0 at year-end; share buyback program (SEK 3bn) ~80% complete with SEK 2.4bn repurchased (9.2 million shares).
Capital Allocation and Dividend Increase
Board proposed dividend increase of SEK 0.50 to SEK 8.75 (≈+6%); CapEx guidance increased for 2026 to SEK 8.0–8.5bn reflecting growth investments.
Sustainability Recognition
Received EcoVadis Platinum (top 1% globally) and CDP A-list recognition, reinforcing ESG credentials important for health care customers.
Negative Updates
Negative Q4 Organic Sales Development and Price/Mix Pressure
Q4 reported negative organic sales growth driven by price declines (management cited selective price reductions to respond to lower input costs and competitive pressure); CFO noted price/mix headwinds in the quarter contributing to the negative development.
Volume Weakness in Key Categories (Q4/YOY)
Group volumes declined ~0.2% year-over-year in Q4 (sequentially volumes were stronger: Q4 vs Q3 ≈ +2%); category-level volume declines included Baby Care ~-4%, Consumer Tissue ~-2%, and Professional Hygiene HoReCa ~-0.5%.
Consumer Tissue Private Label Challenges
Lost some private label contracts due to pricing competition, leading to volume declines in Consumer Tissue and pressured revenue and mix in the quarter; promotional and trade activity remains high in this segment.
One-Off Latin America Impact on Feminine Care Q4
A one-off adjustment to customer rebates in Latin America lowered reported Feminine Care sales in Q4 (management said this was temporary and that underlying Feminine growth would have been low single-digit without the rebate adjustment).
Limited Realized SG&A Run-Rate Savings So Far and Restructuring Costs
Company targeting SEK 1bn run-rate SG&A savings by end of 2026 but has realized very little to date; expects restructuring costs of ~SEK 1.1bn related to the program (upfront charges before run-rate savings).
Market Uncertainty and Pricing Tradeoffs
Management signaled selective price reductions to stimulate volumes and increased A&P (funded by cost savings), which may pressure short-term margins while aiming to restore volume growth—introduces execution risk and margin phasing uncertainty in early 2026.
Asia Brand License Uncertainty
Brands/licensing in Asia (post-Vinda divestment) remain subject to an option held by the buyer; license arrangement expires in 2027 and its future is uncertain, creating potential strategic/regional exposure.
Company Guidance
Guidance and targets from the call: for Q1 2026 management expects COGS to be slightly lower (partly from savings and positive FX in raw materials) and SG&A to be slightly higher versus Q1 2025 (driven by increased A&P); for the full year 2026 they guide CapEx of SEK 8.0–8.5 billion, corporate costs of ~SEK 1.3 billion and a structural tax rate of 25–26%. They reiterated the COGS savings range of SEK 500 million–SEK 1 billion (having already realized just above SEK 500 million in the quarter), target a SEK 1 billion SG&A run‑rate saving towards end‑2026, expect restructuring costs of ~SEK 1.1 billion, and plan to reinvest the majority of savings to fuel growth; balance sheet metrics include net debt/EBITDA ~1.0, and the Board will propose a dividend of SEK 8.75 (up SEK 0.50, +6%); the SEK 3.0 billion buyback program is ~80% executed (SEK 2.4 billion; 9.2 million shares repurchased).Essity Aktiebolag Financial Statement Overview
Summary
Margins have improved meaningfully since 2022 and the balance sheet has strengthened as leverage fell sharply (reported as zero debt in 2025). Offsetting this, revenue has been contracting for multiple years, net profit has been volatile (2024 unusually strong vs. 2025), and cash conversion is only moderate (FCF roughly half of net income in recent years).Income Statement
Profitability has improved meaningfully from the 2022 trough, with stronger gross and operating margins through 2023–2025, indicating better pricing/cost control. However, the top line has been shrinking for several years (revenue down again in 2025), and net profit has been volatile—2024 was unusually strong versus 2025, which reduces confidence in earnings durability.62
Positive
Balance Sheet
Leverage has improved sharply over time, with debt-to-equity declining from elevated levels in 2021–2023 to moderate in 2024 and reported as zero debt in 2025, materially strengthening financial flexibility. Equity remains sizable relative to assets, and returns on equity have been solid overall, though they fluctuated and declined from 2024 to 2025.74
Positive
Cash Flow
Cash generation is consistently positive with healthy free cash flow, and 2025 shows strong free cash flow growth versus 2024. That said, cash conversion is only moderate, with free cash flow covering roughly half of net income in recent years, and operating cash flow relative to net income remains under 1x, suggesting working-capital swings or non-cash items are meaningfully impacting cash realization.58
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 138.49B | 145.55B | 147.15B | 156.17B | 121.87B |
| Gross Profit | 46.12B | 47.13B | 45.13B | 37.23B | 35.09B |
| EBITDA | 25.74B | 26.14B | 20.90B | 15.44B | 20.45B |
| Net Income | 12.66B | 20.89B | 9.55B | 5.57B | 8.62B |
Balance Sheet | |||||
| Total Assets | 167.12B | 185.28B | 202.99B | 210.60B | 175.05B |
| Cash, Cash Equivalents and Short-Term Investments | 9.75B | 15.62B | 5.19B | 4.50B | 4.09B |
| Total Debt | 38.63B | 43.78B | 60.98B | 71.52B | 56.83B |
| Total Liabilities | 81.08B | 96.54B | 123.59B | 134.04B | 106.54B |
| Stockholders Equity | 85.63B | 88.31B | 70.85B | 67.35B | 59.87B |
Cash Flow | |||||
| Free Cash Flow | 8.37B | 9.40B | 14.68B | 5.92B | 7.31B |
| Operating Cash Flow | 15.46B | 16.80B | 21.57B | 12.87B | 14.67B |
| Investing Cash Flow | -3.22B | 9.41B | -7.11B | -14.50B | -12.13B |
| Financing Cash Flow | -14.40B | -22.34B | -11.55B | 1.81B | -3.81B |
Essity Aktiebolag Technical Analysis
Neutral
261.00
Price Trends
270.42
Positive
265.16
Positive
261.18
Positive
Market Momentum
4.83
Positive
49.16
Neutral
43.75
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SE:ESSITY.A, the sentiment is Neutral. The current price of 261 is below the 20-day moving average (MA) of 281.10, below the 50-day MA of 270.42, and below the 200-day MA of 261.18, indicating a neutral trend. The MACD of 4.83 indicates Positive momentum. The RSI at 49.16 is Neutral, neither overbought nor oversold. The STOCH value of 43.75 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SE:ESSITY.A.
Essity Aktiebolag Peers Comparison
UnderperformOutperform
Sector (55)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | kr191.03B | 15.64 | 14.26% | 3.13% | -1.91% | -40.37% | |
65 Neutral | kr191.03B | 15.65 | ― | 3.14% | -1.91% | -40.37% | |
62 Neutral | kr4.52B | 14.75 | 9.65% | 4.83% | 3.79% | 39.15% | |
55 Neutral | $6.65B | 3.83 | -15.92% | 6.20% | 10.91% | 7.18% |
* General Sector Average
SE:ESSITY.A
Essity Aktiebolag
277.50
-19.78
-6.65%
SE:ESSITY.B
Essity AB
277.00
-21.07
-7.07%
SE:DUNI
Duni AB
96.10
2.23
2.38%
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.