Essity stock closed at SEK276.4 on the day of its Q3 2026 report, roughly flat over the past week, yet the earnings story is anything but motionless. The headline is a clear margin squeeze. Quarterly net income landed at SEK2,346m on SEK36,060m of sales, with the trailing net profit margin at 8% compared with 8.6% a year ago. In the short term, that kind of pressure can cap enthusiasm. Over a longer horizon, investors are weighing those thinner margins against multi year earnings forecasts and a P/E of 16.7x that sits close to the global household products average.
Like the resilience of Essity's earnings but uneasy about that 8% margin slipping from 8.6% while the P/E sits near sector levels? Compare it with a curated set of businesses that pair sturdier balance sheets with more robust profitability in our list of solid balance sheet and fundamentals stocks (203 results)
Q3 2026 Earnings Summary
- Revenue (Q3 2026 vs Q3 2025): SEK36,060m vs. SEK34,638m (up about 4.1%)
- Net Income (Q3 2026 vs Q3 2025): SEK2,346m vs. SEK3,341m (down about 29.7%)
- Basic EPS (Q3 2026 vs Q3 2025): SEK3.47 vs. SEK4.86 (declined about 28.7%)
- Net Profit Margin (Trailing 12 Months vs Prior Year): 8.0% vs. 8.6% (compressed by 0.6 percentage points)
Tired of scrolling through dense Essity earnings tables and raw figures? See the full financial picture, including a clear visual view of its valuation setup, inside the company report for Essity.
Evaluating Essity’s Premiumization And Cost Targets
Essity’s bullish story leans heavily on higher margin categories and tighter expenses actually feeding through to earnings.
"Bullish analysts expect Essity to continue shifting its portfolio toward higher-margin Health & Medical, Personal Care and Professional Hygiene segments, using cost programs and capital expenditure to support growth in these areas."
The latest quarter offers partial confirmation. Volume led growth concentrated in incontinence, wound care, Feminine Care and premium Professional Hygiene, while lower margin Consumer Tissue shrank and remains under review. SG&A savings added about 20 bps of margin benefit and productivity gains of roughly SEK180m helped offset COGS inflation, even though gross margin still compressed and organic sales slipped slightly.
That disagreement has a full argument behind it. → Uncover the lower Fair Value this Narrative argues for.
Essity Cost Fears Partly Real, Partly Deferred
The cautious view says Essity’s higher COGS and overheads could swamp efficiency work and mix improvement.
"Although Essity is ramping a SEK 1,000,000,000 SG&A savings program with benefits weighted to late 2026, management also guides to higher SG&A and advertising and promotion in Q3 2026. This could mute the net effect of planned efficiencies and restrain earnings if revenue growth does not accelerate."
Q3 results give that concern some bite. Gross margin compressed by about 170 bps as COGS rose roughly SEK660m, while organic sales slipped and price/mix was slightly negative. SG&A savings added only about 20 bps, so efficiency benefits did not offset inflation yet. Execution milestones on cost control remain only partially met.
Hunt For Quieter Margin Stories
Essity just showed how a solid business can still wrestle with tighter profitability. The real opportunity is spotting shares that could be undervalued before stronger fundamentals get fully priced in.
- Company 1 - 28% below our estimate - focus on direct to consumer channels and a refreshed denim brand to support margins.
- Company 2 - 49% below our estimate - move from pure CFD trading toward a multi asset investing platform as client assets reshape revenue.
- Company 3 - 27% below our estimate - secure complex cable projects tied to grid upgrades and energy transition, using added capacity for higher value contracts.
Those are three of them. See the full list of 191 companies trading below our fair value estimates →
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