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SKF AB Class B (SKFRY)
OTHER OTC:SKFRY
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SKF AB
(OTC:SKFRY)
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Rating:61Neutral
Price Target:
$28.00
▲(8.70% Upside)
The score is driven mainly by solid balance-sheet quality and constructive (but risk-balanced) earnings-call guidance, offset by weakening recent profitability/revenue trends and inconsistent cash conversion. Technicals are mixed with soft near-term momentum, and valuation is a headwind due to a relatively high P/E despite a ~3% dividend yield.
Positive Factors
Improving leverage and balance sheet stability
Material deleveraging and low net debt/EBITDA (~0.5) provide durable financial flexibility. A stronger balance sheet supports capital allocation for the Automotive separation, continued dividend payouts, and cyclical downturns without forcing distress sales or heavy refinancing needs.
Dominant Industrial segment and margin resilience
High share of sales and profits from Industrial end markets anchors revenue and profit stability. Superior Industrial margins and outperformance versus Automotive reduce overall earnings volatility and support sustained cash generation even if weaker cyclical markets pressure other segments.
Delivered structural cost savings and manufacturing program
Realized SEK 5bn of manufacturing savings and a clear SEK 2bn rightsizing target improve long-term operating leverage. These structural efficiency gains can raise sustainable margins and free cash flow over multiple years, helping offset cyclical revenue volatility and funding strategic initiatives.
Negative Factors
Weak and low‑margin Automotive franchise
A large revenue slice producing minimal profits indicates structural competitiveness or mix issues in Automotive. Persistent low margins and negative organic trends can depress group profitability and complicate the spin’s economics, requiring material restructuring or continued cross-subsidization from Industrial.
Declining revenue growth and margin compression
Two years of falling top-line and a roughly halved net margin versus peak reflect weakening demand and limited operating leverage. If sustained, lower growth and compressed margins erode returns on capital and make funding separations, capex and R&D more costly relative to the cash generated.
Uneven cash conversion and one-off cash outflows
Inconsistent FCF conversion and a material OCF decline driven by separation costs reduce the company’s ability to self-fund investments and pay dividends reliably. Repeated swings in cash conversion increase refinancing and execution risk around the Automotive spin and footprint changes.
SKF AB (SKFRY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.23B
Dividend Yield2.98%
Average Volume (3M)440.00
Price to Earnings (P/E)30.7
Beta (1Y)1.02
Revenue Growth-0.39%
EPS Growth-11.34%
CountryUS
Employees38,426
SectorIndustrials
Sector Strength72
IndustryManufacturing - Tools & Accessories
Share Statistics
EPS (TTM)0.40
Shares Outstanding426,420,260
10 Day Avg. Volume0
30 Day Avg. Volume440
Financial Highlights & Ratios
PEG Ratio-0.66
Price to Book (P/B)2.08
Price to Sales (P/S)1.21
P/FCF Ratio25.94
Enterprise Value/Market Cap9.64
Enterprise Value/Revenue1.29
Enterprise Value/Gross Profit4.82
Enterprise Value/Ebitda9.52
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
SKF AB Business Overview & Revenue Model
Company DescriptionAB SKF (publ) engages in the design, development, and manufacture of bearings, seals, lubrication systems, and services worldwide. It operates in two segments, Industrial and Automotive. The company offers rolling bearings, mounted bearings and housings, super-precision bearings, slewing bearings, plain bearings, magnetic bearings and systems, industrial and automotive seals, lubrication management solutions, maintenance products, condition monitoring systems, power transmission solutions, test and measuring equipment, vehicle aftermarket, and waste electric and electronic equipment products. It also provides various services, including application engineering, asset management, condition-based maintenance, mechanical maintenance, remanufacturing and customization, and training solutions. The company offers its solutions for various industries, including aerospace, agriculture, cars and light trucks, construction, food and beverage, general machinery, machine tools, marine, material handling, metals, mining, mineral processing and cement, ocean energy, oil and gas, pulp and paper, railways, trucks, trailers, buses, two and three wheelers, and wind energy. AB SKF (publ) was founded in 1907 and is headquartered in Gothenburg, Sweden.
How the Company Makes MoneySKF generates revenue primarily through the sale of its core products, which include bearings, seals, and lubrication systems. The company also earns significant income from its service offerings, which encompass maintenance and reliability services, condition monitoring, and asset management solutions. Key revenue streams are driven by the demand from various sectors such as manufacturing, automotive, and renewable energy. Additionally, SKF engages in strategic partnerships and collaborations with original equipment manufacturers (OEMs) and distributors, enhancing its market reach and enabling co-development of innovative solutions. The company’s focus on digitalization and sustainability initiatives further contributes to its earnings by aligning with market trends and customer needs, ensuring long-term growth and profitability.
SKF AB Earnings Call Summary
Earnings Call Date:Jan 30, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 21, 2026
Earnings Call Sentiment Neutral
The call presents a mixed but constructive picture: SKF demonstrated clear operational and margin resilience (improved adjusted margins, Industrial outperformance, completion of a SEK 5bn manufacturing program, progress on rightsizing and deleveraging) while facing material near-term headwinds from weak Automotive demand, significant FX impacts that depressed reported sales (~10.6% FX drag in Q4) and separation-related one-off costs and dissynergies that will weigh on near-term cash flow. Management articulated a credible plan and timeline for the Automotive spin (Q4 2026) and reiterated longer-term savings targets, but the balance between rightsizing savings and separation dissynergies in 2026 introduces execution risk. Overall the positives and negatives are roughly balanced.Q4-2025 Updates
Positive Updates
Improved Adjusted Operating Margins
Adjusted operating margin improved to 11.8% in Q4 and to 12.7% for full-year 2025, reflecting stronger margin resilience despite challenging markets and FX headwinds.
Industrial Segment Outperformance
Industrial represented ~73% of Q4 net sales and ~96% of adjusted operating profit; reported organic growth just north of 2% in Q4 and an adjusted operating margin of 15.6% (up from 14.6% year-over-year).
Completion of World-Class Manufacturing Program
World-class manufacturing program delivered on its SEK 5 billion cost-savings ambition and continues to generate carryover benefits into 2026.
Rightsizing Program Progress
Rightsizing generated roughly SEK 190 million benefit in Q4; target remains an incremental SEK 2.0 billion run-rate savings by end of 2027, with linear delivery expected over 2026–2027.
Strong Cash Generation and Deleveraging
Operating cash flow for full-year 2025 was SEK 8.4 billion; net debt excluding pensions fell from SEK 7.5 billion to SEK 5.7 billion; net debt/EBITDA (ex. pension) ~0.5 and adjusted ROCE stable at 14.3%.
Maintained Dividend and Shareholder Return
Board proposed maintained dividend of SEK 7.75 per share (to be paid in two tranches), representing c.45% of adjusted net profit, signaling confidence in the balance sheet and cash generation.
Strategic Progress on Automotive Separation
Separation program is on track with strong momentum; SKF identified an asset-transfer approach to accelerate reduction of contract manufacturing and now plans an Automotive listing in Q4 2026.
Negative Updates
Weak Automotive Demand and Low Margins
Automotive represented 27% of Q4 net sales but only ~4% of adjusted operating profit; Automotive organic growth was close to -6% in Q4 and -4% for the full year, with a weak Q4 adjusted operating margin of 1.7%.
Significant FX Headwind
Currency effects reduced reported sales by c.10.6% in Q4 and impacted operating margin (noted c.-1.4 percentage points overall); Automotive faced nearly -3 percentage points headwind in the quarter. Q1 2026 FX drag is guided at about -SEK 800 million year-over-year.
Flat Organic Growth Overall
Net sales were flattish on an organic basis in Q4 (0.0%) and full-year organic growth was slightly negative (-0.4%), indicating lack of broad market demand recovery.
One-Off and Separation-Related Costs
Q4 one-off costs approx. SEK 1.0 billion (half automotive separation, half footprint optimization including Argentinian plant closure); full-year items affecting comparability ~SEK 3.0 billion and forecast one-off separation/footprint costs for 2026 of SEK -2.5 to -3.0 billion.
Near-Term Dissynergies from Automotive Separation
Automotive is being set up to operate more independently in 2026, creating near-term dissynergies (IT, management structures) that are expected to offset rightsizing savings in Q1 and through the spin period, causing short-term margin pressure and cash outflows.
Reduced Operating Cash Flow vs Prior Year
Operating cash flow declined to SEK 8.4 billion in 2025 from SEK 10.8 billion the prior year (c. SEK 2.5 billion lower), driven by one-off items and separation-related cash outflows (c. SEK 3.0 billion IOCs).
Automotive Listing and Execution Risks
While management remains confident in a Q4 2026 listing, accelerating asset transfers to change contract-manufacturing arrangements increases execution complexity and creates timing and transparency questions about when separation savings will net out versus dissynergies.
Company Guidance
Management guided that Q1 demand should remain at Q4 levels with organic sales expected to strengthen somewhat year‑over‑year (Q4 had flat organic growth), but warned of a further FX earnings headwind of roughly SEK 800m in Q1 driven by a weaker dollar and Turkish lira; tariffs are expected to be largely compensated in Q1 given current rates. For 2026 they expect a tax rate of ~28% (ex. automotive separation/divestments), total CapEx of about SEK 5bn (industrial CapEx ~5% of sales, with additional Automotive separation‑related investment included), and one‑off separation and footprint optimization costs of around SEK ‑2.5bn to ‑3bn for the year (consistent with the SEK 6.5bn guidance for Q4 2025–2028). They reiterated rightsizing savings will reach a SEK 2bn run‑rate by end‑2027 (phased linearly) and confirmed an Automotive listing targeted for Q4 2026; for context Q4 net sales were ~SEK 22bn and adjusted operating margin 11.8% (FY net sales just under SEK 92bn, FY adjusted operating margin 12.7%).SKF AB Financial Statement Overview
Summary
Balance sheet strength and improving leverage (debt/equity down to 0.29) support stability, but operating results have weakened with negative revenue growth in 2024–2025, margin compression (net margin down to 4.29% in 2025), and uneven cash conversion (FCF only ~0.54x net income in 2025).Income Statement
Revenue has been volatile, with growth turning negative in 2024 (-0.05%) and declining further in 2025 (-2.58%) after stronger growth in 2022–2023. Profitability remains solid but has clearly compressed: net margin fell from 8.97% (2021) to 4.29% (2025), and operating margin also stepped down versus the 2021–2024 range. Gross margin has been relatively stable in the mid-to-high 20s, but the earnings decline in 2025 (net income down meaningfully vs. 2024) points to weaker operating leverage and/or higher costs.62
Positive
Balance Sheet
Leverage looks manageable and improving: debt relative to equity declined to 0.29 in 2025 from ~0.34–0.52 over 2020–2024, supported by a sizable equity base. Returns on equity remain positive but have moderated from peak levels (about 16.8% in 2021 down to ~7.3% in 2025), reflecting the recent earnings pressure. Overall, the balance sheet appears stable with reduced leverage, though profitability deterioration is the key watch item.74
Positive
Cash Flow
Cash generation is positive with free cash flow improving in 2025 (+2.51%) after a decline in 2024, but the longer-term pattern is uneven (notably weak free cash flow in 2021–2022 and a sharp rebound in 2023). Free cash flow is covering only about half of net income in 2025 (0.54), indicating earnings are not fully converting into cash at a consistently strong rate. Operating cash flow is solid in absolute terms, but cash flow efficiency metrics remain mixed year-to-year, suggesting working-capital and/or investment swings.58
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 91.58B | 98.72B | 103.88B | 96.93B | 81.73B |
| Gross Profit | 24.52B | 27.37B | 26.34B | 24.47B | 23.27B |
| EBITDA | 12.38B | 14.61B | 14.78B | 11.54B | 13.82B |
| Net Income | 3.93B | 6.47B | 6.39B | 4.47B | 7.33B |
Balance Sheet | |||||
| Total Assets | 106.42B | 119.41B | 111.90B | 110.92B | 99.63B |
| Cash, Cash Equivalents and Short-Term Investments | 9.47B | 11.09B | 13.32B | 11.22B | 13.66B |
| Total Debt | 15.34B | 20.04B | 21.69B | 21.27B | 19.21B |
| Total Liabilities | 50.75B | 57.44B | 56.95B | 56.88B | 54.26B |
| Stockholders Equity | 53.56B | 59.65B | 52.74B | 51.93B | 43.65B |
Cash Flow | |||||
| Free Cash Flow | 4.28B | 5.11B | 8.02B | 428.00M | 1.36B |
| Operating Cash Flow | 7.89B | 10.79B | 13.78B | 5.64B | 5.25B |
| Investing Cash Flow | -1.50B | -5.60B | -5.87B | -5.35B | -3.15B |
| Financing Cash Flow | -8.29B | -7.57B | -4.51B | -3.40B | -3.51B |
SKF AB Technical Analysis
Positive
25.76
Price Trends
26.76
Positive
26.11
Positive
24.48
Positive
Market Momentum
0.14
Positive
52.73
Neutral
32.50
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SKFRY, the sentiment is Positive. The current price of 25.76 is below the 20-day moving average (MA) of 27.35, below the 50-day MA of 26.76, and above the 200-day MA of 24.48, indicating a bullish trend. The MACD of 0.14 indicates Positive momentum. The RSI at 52.73 is Neutral, neither overbought nor oversold. The STOCH value of 32.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SKFRY.
SKF AB Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $16.34B | 61.17 | 8.66% | ― | 8.27% | 19.06% | |
78 Outperform | $19.91B | 19.95 | 17.96% | 2.52% | 0.24% | -1.85% | |
77 Outperform | $15.73B | 30.63 | 38.11% | 1.22% | 3.27% | 10.89% | |
69 Neutral | $6.90B | 24.09 | 9.60% | 1.61% | -1.01% | -12.13% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
62 Neutral | $13.11B | 31.98 | 4.52% | 4.42% | -1.40% | ― | |
61 Neutral | $12.23B | 30.68 | 8.42% | 2.98% | -0.39% | -11.34% |
* Industrials Sector Average
SKFRY
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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.