Europe Stocks — Valuations, P/E & Dividends

Lion Finance Group's third-quarter 2026 results showed net profit of GEL 661.9m and net interest income of GEL 1,318.8m. Interest income grew 21.6% year on year, accelerating from 20.8% in the second quarter, while reported-period profit rose 21.0%. Return on equity stands at 27.4% and the shares trade at a P/E of 8.2 – the market already prices in the durability of that return. Our conclusion: rather attractive – on the portal's model the upside to fair value is +46%. Our view: the share is rather attractive at the current price; upside on the portal model +46%.

Our view: is there upside

Our view in numbers

Key takeaways

— Net interest income grew 21.6% year on year, and the acceleration from 20.8% in the second quarter shows the loan book is still speeding up

— Third-quarter profit rose 21.0% year on year, growing almost in line with interest income rather than through one-off items

— A 27.4% return on equity against a P/E of 8.2 means the market pays less per lari of profit than the bank earns on its capital

— Trailing twelve-month dividend yield is 2.35% – the payout is modest, which keeps capital inside the business

— On the portal's model the shares are 46% below fair value, and that gap is the main argument for the stock

Key figures, GEL bn

Net interest income grew 21.6% year on year, and the acceleration from 20.8% in the second quarter shows the loan book is still speeding up

Net interest income in the third quarter of 2026 was GEL 1,318.8m against GEL 1,084.2m a year earlier. Growth of 21.6% year on year came in above the 20.8% of the second quarter – the trend accelerated rather than slowed. This is the key line of the report: the bank discloses almost no fee income, and the entire top line rests on interest.

The acceleration matters because it has now run for two quarters in a row: growth was 15.0% in the first quarter, 20.8% in the second and 21.6% in the third. That trajectory suggests either the loan book is growing faster or lending rates are holding above funding costs. The report does not say which of the two is driving income, but the fact of acceleration across three quarters is a strong signal.

For a shareholder this means profit is not yet hitting a ceiling. As long as interest income grows at over twenty percent, the bank can absorb both cost growth and provisioning without showing a profit decline.

Third-quarter profit rose 21.0% year on year, growing almost in line with interest income rather than through one-off items

Net profit in the third quarter of 2026 was GEL 661.9m, 21.0% above the year-earlier level. Profit growth almost matched the 21.6% growth in interest income – a half-point gap is too small to point to any other driver. Profit grew with revenue, not through asset sales or one-off income.

This is an important difference from many bank reports, where quarterly profit jumps on reserve releases or a single transaction. Here profit grows exactly as much as core income grows – the quality of the result is high. There are no one-off items in the disclosure, and that is a plus: the result is repeatable.

At the same time, profit grows more slowly than interest income – meaning part of the gain is absorbed by costs or provisions. The report does not show how large that part is, but the half-point gap itself suggests cost control has not yet broken down.

A 27.4% return on equity against a P/E of 8.2 means the market pays less per lari of profit than the bank earns on its capital

Lion Finance Group's return on equity is 27.4% – a very high figure for a bank. At the same time the trailing twelve-month P/E is 8.2 and market capitalisation is GEL 20,229.1m. The relationship is simple: the market values the bank at a little over eight times annual profit, while the bank itself earns more than a quarter of its capital each year.

That combination appears when investors do not believe in the durability of high returns. The Georgian market is small, and any slowdown in lending or rise in funding costs could quickly cut the margin. But trailing twelve-month profit is GEL 2,455.4m, and even if profitability halved, the P/E would stay within ten.

On the portal's model the fair value of the shares is 46% above the current price. This is our own estimate, not a market consensus, and it rests on current return on equity and profit. If profit holds at the trailing twelve-month level, the gap is real.

Trailing twelve-month dividend yield is 2.35% – the payout is modest, which keeps capital inside the business

The trailing twelve-month dividend yield is 2.35% – modest for a bank with a 27.4% return on equity. Trailing twelve-month profit is GEL 2,455.4m, and at that level of profitability payouts take only a small share of earnings. The rest stays in capital and works toward future growth.

For an investor this means the dividend is not the main source of return here. The bulk of the return comes from growth in the value of the business, not from current payouts. With a P/E of 8.2 and a return on equity of 27.4%, reinvesting profit delivers more than paying it out – and management, judging by the payout, follows the same logic.

What could reduce the payout: a fall in profit, higher capital requirements or a large acquisition. But at the current level of profitability and a modest payout, the risk of a dividend cut is small – if anything, the payout could rise once the bank hits a growth ceiling.

On the portal's model the shares are 46% below fair value, and that gap is the main argument for the stock

On the portal's model the fair value of Lion Finance Group shares is 46% above the current price. The model rests on current profit and return on equity – the very metrics that look stable in the third-quarter report. This is not a market forecast or a target price – it is our internal estimate, and it shows how far the current price diverges from the profitability of the business.

The main risk to that estimate is the durability of interest income. If growth slows from 21.6% to single digits, profit and return on equity will fall, and the 46% gap will narrow. But as long as acceleration has held for three quarters in a row, the model reflects current reality rather than hope.

The second argument is the dividend. At a 2.35% yield it does not decide the outcome, but it adds to the total return. If the bank keeps profit at the trailing twelve-month level and continues to pay, the shareholder gets both value growth and a small current yield.

Valuation on the latest reported figures

Bottom line

The strong side of the report is the acceleration of interest income to 21.6% and profit growing almost in line with it, without one-off items. A 27.4% return on equity against a P/E of 8.2 leaves a gap that the portal's model puts at 46%. The weak spot is reliance on a single income source and a modest 2.35% dividend that will not save the day if growth slows. The question for a holder now is whether interest-income acceleration holds for at least two more quarters. Our conclusion: rather attractive – on the portal's model the upside is +46%. Our view: the share is rather attractive at the current price; upside on the portal model +46%.

On 25 November Evolution reported results for the third quarter of 2026. Revenue came in at EUR 526.1 million, up 3.7% year on year after a 1.2% decline a quarter earlier; EBITDA was EUR 333.8 million (down 0.9%) and net profit EUR 243.3 million (down 3.6%). Top-line growth resumed, but the EBITDA margin fell from 66.4% to 63.5% and the net margin from 49.8% to 46.2%. At an EV/EBITDA of 8.2 against its own three-year average of 9.7 and a portal-model upside of +6%, the share looks rather attractive, though the weakness in margin and profit keeps the rating from going higher.

Key takeaways

— Revenue accelerated to +3.7% year on year after -1.2% a quarter earlier

— EBITDA fell 0.9% despite revenue growth, and the margin dropped from 66.4% to 63.5%

— Net profit declined 3.6%, and its margin from 49.8% to 46.2%

— Operating cash flow of EUR 366.1 million exceeded quarterly EBITDA

— Net debt remains negative, and the ratio to LTM EBITDA is -0.5

— EV/EBITDA of 8.2 is 15% below its own three-year average of 9.7

— The portal model implies +6% upside to fair value

Attractiveness

Key figures, EUR bn

Revenue accelerated to +3.7% year on year after -1.2% a quarter earlier

In the third quarter of 2026 revenue reached EUR 526.1 million, up 3.7% year on year. A quarter earlier the dynamics were negative at -1.2%, and in the first quarter at -1.5%. Growth has therefore resumed and accelerated relative to the second quarter.

The quarterly sequence shows the decline was short-lived: after EUR 513.0 million in the first quarter and EUR 517.8 million in the second, revenue returned above EUR 520 million. For a company with a high profitability base, even such a modest revenue increase means a substantial absolute contribution to EBITDA, provided costs do not grow faster.

The acceleration in revenue is the main positive fact of the report. However, growth of 3.7% alone did not offset the margin decline, so EBITDA and profit came in lower year on year.

EBITDA fell 0.9% despite revenue growth, and the margin dropped from 66.4% to 63.5%

EBITDA for the third quarter of 2026 was EUR 333.8 million, down 0.9% year on year. With revenue up 3.7%, this means costs grew faster than income. The EBITDA margin fell from 66.4% to 63.5%, a decline of 2.9 percentage points.

Operating profit was EUR 290.3 million, also below the prior-year level. The gap between EBITDA and operating profit is small, typical of a business with a low depreciation burden. Judging by the revenue-to-EBITDA relationship, the pressure on margin came through operating costs rather than depreciation.

A 2.9 pp margin decline on revenue of EUR 526.1 million corresponds to roughly EUR 15 million of EBITDA foregone relative to maintaining last year's profitability. That is a substantial sum, which more than offset the entire absolute increase in revenue.

Net profit declined 3.6%, and its margin from 49.8% to 46.2%

Net profit for the third quarter of 2026 was EUR 243.3 million, down 3.6% year on year. The net margin fell from 49.8% to 46.2%. The decline in profit is slightly deeper than that in EBITDA, pointing to higher below-the-line charges, likely financial or tax items.

The absolute level of profit remains very high: EUR 243.3 million per quarter is about 46 euro cents per euro of revenue. For a company that has long operated at a margin near 50%, the current level does not look anomalous, but it is below its usual level.

Over the trailing twelve months net profit was EUR 1,053.4 million. This figure is used for the LTM P/E of 12.0. The 3.6% quarterly decline does not change the picture dramatically, but it confirms that the pressure on profitability is not a one-off.

Operating cash flow of EUR 366.1 million exceeded quarterly EBITDA

Operating cash flow for the third quarter of 2026 was EUR 366.1 million, above quarterly EBITDA of EUR 333.8 million. The excess is explained by a positive working-capital change or non-cash items not disclosed in the facts. Importantly, the flow remains strong and fully covers capital expenditure needs.

Capital expenditure for the third quarter is not disclosed, but in the first and second quarters it was EUR 34.6 million and EUR 34.7 million respectively. On that basis, free cash flow for the quarter exceeds EUR 300 million, more than double the coverage of net debt reduction or dividend payments.

Over the trailing twelve months operating cash flow was EUR 1,301.6 million against LTM EBITDA of EUR 1,442.8 million. The ratio below one is normal for a company with a high share of non-cash charges, but the quarterly flow shows that cash generation has not suffered from the margin decline.

Net debt remains negative, and the ratio to LTM EBITDA is -0.5

Net debt at the latest balance-sheet date is minus EUR 726.9 million, meaning the company has a net cash position. The ratio of net debt to LTM EBITDA is -0.5. This means cash and equivalents exceed debt obligations, and the company does not depend on borrowed funding.

Negative net debt against LTM EBITDA of EUR 1,442.8 million provides a substantial cushion. Even if the cash position shrinks, the company would retain the ability to service obligations and fund investment from its own resources.

Interest on debt is not disclosed in the facts, but with a negative net position interest expense is likely small or offset by interest income. This supports net profit and explains why a 0.9% decline in EBITDA led to a 3.6% decline in profit: the below-the-line effect may be tax-related rather than debt-related.

EV/EBITDA of 8.2 is 15% below its own three-year average of 9.7

The LTM EV/EBITDA multiple is 8.2 against its own three-year average of 9.7. The share trades 15% below its historical valuation on this multiple. This means the market values current EBITDA more cheaply than it did on average over the past three years.

The LTM P/E is 12.0 on a market capitalisation of EUR 12,618.5 million. For a company with a net margin near 46% and negative net debt, that level looks low. However, the decline in margin and profit in the reported quarter may explain why the market is not willing to pay more.

The company's own three-year average is the only valid comparison base, since no sector or peer data is in the facts. On that basis the share is cheaper than usual, and this is the main argument in favour of attractiveness.

The portal model implies +6% upside to fair value

On the portal's model, which values EBITDA growth at a target multiple against market capitalisation, the upside to fair value is +6%. This is the portal's own estimate, not a market consensus or a target price.

Upside of +6% is modest but positive, and it is consistent with the conclusion that the share trades below its historical valuation. If EBITDA returns to growth and the margin stabilises, the upside could increase.

The portal-model estimate does not account for a possible further decline in margin. If pressure on profitability persists, actual fair value would be lower, and the current discount to history could prove justified.

Valuation on the latest reported figures

Bottom line

The strong side of the report is the resumption of revenue growth to +3.7% year on year after two quarters of decline, along with operating cash flow of EUR 366.1 million exceeding EBITDA. The weak side is the 0.9% decline in EBITDA and 3.6% decline in net profit due to margin compression. Negative net debt and an EV/EBITDA of 8.2 against a three-year average of 9.7 support the valuation. The portal model implies +6% upside. The verdict is rather attractive: the discount to its own history and the net cash position outweigh the current margin decline, but a stabilisation in profitability is needed for a higher rating.

On 25 August Evolution reported results for the second quarter of 2026. Revenue fell 1.2% year on year to EUR 517.8 million, EBITDA declined 1.2% to EUR 341.0 million, while net profit rose 1.3% to EUR 251.4 million. The EBITDA margin held at 65.9%, and the net margin improved to 48.6%. At 12.4 times LTM earnings and 8.9 times LTM EBITDA, the stock looks neutral: the revenue decline is offset by a stable margin and a net cash position, but there is no driver for multiple expansion.

Key takeaways

— Revenue falls for a third straight quarter, but the pace of decline is barely changing

— EBITDA slipped just 1.2%, and the margin held at 65.9%

— Net profit rose 1.3% even as operating profit fell

— The company sits on a net cash cushion of EUR 1.1 billion

— Free cash flow remains solid, but capital expenditure is creeping up

— Valuation is below its own three-year history, but above the sector average

— The portal model sees no upside: fair value is just 1% above the market

Attractiveness

Key figures, EUR bn

Revenue falls for a third straight quarter, but the pace of decline is barely changing

In the second quarter of 2026, revenue came in at EUR 517.8 million, down 1.2% from a year earlier. This is the third consecutive quarterly decline: in the first quarter the drop was 1.5%, and the fourth quarter of 2025 was also negative. The pace of decline is roughly the same as in the first quarter, meaning the company has not yet broken out of this trend.

The main reason is the high base effect from last year, when revenue reached EUR 524.3 million in the second quarter of 2025. Since then, quarterly revenue has fluctuated in a narrow range of EUR 513–518 million. This suggests the business has stabilised at a new level, but there are no visible drivers for a return to growth.

EBITDA slipped just 1.2%, and the margin held at 65.9%

EBITDA in the second quarter of 2026 was EUR 341.0 million, down 1.2% year on year. This exactly matches the revenue dynamics, so the EBITDA margin remained at 65.9%, the same as a year earlier. The company lost no margin points despite the revenue decline.

Such margin resilience points to tight cost control. Operating profit fell 2.8% to EUR 297.8 million, but that decline is smaller than one might expect given the revenue drop. It appears the company is cutting variable costs or benefiting from its cost structure.

Net profit rose 1.3% even as operating profit fell

Net profit in the second quarter of 2026 was EUR 251.4 million, up 1.3% from a year earlier. This came despite a 2.8% decline in operating profit to EUR 297.8 million. The difference is explained by changes in items below the operating line – likely lower interest expenses or a reduced tax burden.

The net margin rose to 48.6% from 47.4% a year earlier. This is the highest level in several quarters. However, profit growth against falling revenue suggests the improvement is more financial than operational.

The company sits on a net cash cushion of EUR 1.1 billion

Net debt as of 30 June 2026 stood at minus EUR 1.1 billion, meaning the company has a net cash position. It increased by EUR 0.1 billion over the quarter: from minus EUR 1.0 billion on 31 March 2026 to minus EUR 1.1 billion on 30 June. Over the year, the cushion grew by EUR 0.6 billion – from minus EUR 0.4 billion on 30 June 2025.

The net debt to LTM EBITDA ratio is minus 0.75. This is a very comfortable level, giving the company room to fund investments and dividends without borrowing. However, the direction of change in this ratio is not given in the FACTS, so its dynamics cannot be discussed.

Free cash flow remains solid, but capital expenditure is creeping up

Operating cash flow in the second quarter of 2026 was EUR 293.0 million, up 30% from EUR 225.3 million a year earlier. This is a strong result, significantly exceeding net profit. Capital expenditure rose to EUR 34.7 million from EUR 33.0 million a year earlier. Free cash flow therefore amounted to about EUR 258 million.

The rise in operating cash flow against falling revenue points to better working capital management. The company is collecting cash faster than it spends. This confirms its ability to generate cash even amid stagnant revenue.

Valuation is below its own three-year history, but above the sector average

The LTM EV/EBITDA multiple is 8.9. The three-year average for this multiple is 10.5. So the stock is currently trading below its historical norm. This could indicate undervaluation if the company returns to growth, or that the market is pricing in further deceleration.

The LTM P/E ratio is 12.4. With a return on equity of 23.6%, this does not look expensive. However, for a company with falling revenue, even this multiple may not offer upside without a turnaround.

The portal model sees no upside: fair value is just 1% above the market

According to the portal model, which compares EBITDA growth with a target multiple and market capitalisation, the fair value of the share is only 1% above the current price. This means the market is already pricing in the current growth and margin trends.

For meaningful upside, the company needs either to resume revenue growth or to substantially improve its margin. Neither is currently evident. The portal model is our own tool and is not a consensus forecast.

Valuation on the latest reported figures

Bottom line

Evolution remains a highly profitable business with a net cash position of EUR 1.1 billion and strong operating cash flow. However, revenue has been falling for three consecutive quarters, and the pace of decline is not slowing. Net profit grew only due to items below the operating line, not from core operations. The valuation is below its own three-year history, but the portal model sees no upside. A change in verdict would require either a turnaround in revenue or a more aggressive dividend policy.

Lion Finance Group has reported its results for the second quarter of 2026. Net profit came in at 618.8 million lari, up 20.6% year on year, while net interest income reached 1,282.7 million lari, adding 20.8% to the level of the second quarter of 2025. Over the last twelve months the bank earned 2,340.7 million lari of net profit with a return on equity of 27.1%. On a P/E of 8.9 and with the portal's model putting upside at 40%, the share looks attractive, but the main contribution to the result still comes from interest income rather than fees.

Key takeaways

— Q2 2026 net profit rose 20.6% year on year to 618.8 million lari, with all growth coming from interest income

— Net interest income added 20.8% year on year to reach 1,282.7 million lari, while fee and commission income is not disclosed in the report

— A return on equity of 27.1% combined with a P/E of 8.9 creates scope for a re-rating of the share

— Trailing twelve-month dividend yield stands at 2.3%, which is modest against the key rate and the payout history

— The portal's model estimates 40% upside from the current price, well above the market's valuation

Attractiveness

Key figures, GEL bn

Q2 2026 net profit rose 20.6% year on year to 618.8 million lari, with all growth coming from interest income

In the second quarter of 2026, Lion Finance Group earned 618.8 million lari of net profit, up 20.6% from a year earlier. This is an acceleration from the first quarter of 2026, when profit was 585.0 million lari, and from the fourth quarter of 2025 with 589.7 million lari. Profit growth fully matches the dynamics of net interest income, which increased by 20.8% year on year.

The main contribution to the result comes from interest income: for the quarter it amounted to 1,282.7 million lari versus 1,061.7 million lari a year earlier. Fee and commission income is not disclosed in the report, so its contribution cannot be assessed. Over the last twelve months, net profit reached 2,340.7 million lari, and net interest income – 4,700.0 million lari, confirming a stable dependence on the interest business.

Profit growth of 20.6% with net interest income up 20.8% means that non-interest items had no significant impact on the result. This suggests that the bank has not yet diversified its income towards fees, and its profit is sensitive to the dynamics of interest rates and lending volumes.

Net interest income added 20.8% year on year to reach 1,282.7 million lari, while fee and commission income is not disclosed in the report

Net interest income in the second quarter of 2026 amounted to 1,282.7 million lari, up 20.8% from 1,061.7 million lari in the second quarter of 2025. This is the highest quarterly figure over the last five quarters: in the third quarter of 2025 it was 1,084.2 million lari, in the fourth – 1,242.3 million lari, in the first quarter of 2026 – 1,125.8 million lari. Growth accelerated relative to the first quarter, when the year-on-year increase was less significant.

Fee and commission income is not disclosed in the provided reporting, so it is impossible to assess how diversified the bank's income is. However, the fact that net profit grows at almost the same pace as interest income indicates that non-interest sources are either absent or have no noticeable impact. For a bank, this means increased sensitivity to the interest margin and the cost of funding.

Over the last twelve months, net interest income reached 4,700.0 million lari, confirming the resilience of the interest business. However, without disclosure of fee income, it is impossible to judge the quality of the revenue base and its sustainability in the event of falling rates.

A return on equity of 27.1% combined with a P/E of 8.9 creates scope for a re-rating of the share

Lion Finance Group's return on equity over the last twelve months is 27.1%, a high figure for the banking sector. At the same time, the share trades at a P/E of 8.9, implying a significant discount to fundamental value. A combination of high profitability and a low multiple usually indicates undervaluation, unless the market is pricing in risks related to the sustainability of profit.

The portal's model estimates upside of 40% from the current price. This estimate is based on comparing return on equity and the price-to-book ratio. If profit remains at the current level and the multiple stays unchanged, the share could be re-rated by the market. However, the model does not account for possible pressure on the interest margin or deterioration in asset quality.

The company's market capitalisation is 20,754.3 million lari, which, with net profit of 2,340.7 million lari over the last twelve months, gives the stated P/E. For comparison with its own history, the FACTS do not contain data on the average P/E over three years, so it cannot be stated whether the current multiple is above or below its historical level. This limits the assessment of attractiveness.

Trailing twelve-month dividend yield stands at 2.3%, which is modest against the key rate and the payout history

Lion Finance Group's dividend yield over the last twelve months is 2.3%. This is a low figure, especially given the high return on equity of 27.1% and the low P/E of 8.9. With such profitability, the company could allocate a larger share of profit to dividends, but the actual payout is modest.

The FACTS do not contain data on the dividend for 2025 or on the dividend policy, so it is impossible to assess what share of profit the company plans to distribute. Our estimate of future payouts can only be made on the basis of the current yield and profit, but without a confirmed payout ratio it remains speculative. If the company maintains the current level of dividends, the yield will remain around 2.3%, which is below the key rate.

For an income-oriented investor, such a yield is unlikely to compensate for the risks associated with the concentration of profit in interest income. However, if the company increases its payout ratio, the dividend yield could rise. For now, the dividend is not the main factor in the share's attractiveness.

The portal's model estimates 40% upside from the current price, well above the market's valuation

According to the portal's model, the upside for Lion Finance Group shares is 40% from the current price. This estimate is based on comparing the return on equity of 27.1% and the price-to-book ratio. The model assumes that the market underestimates the sustainability of the bank's profit and its ability to generate high returns on capital.

However, the model is not a market consensus or a target price. It reflects only one possible scenario in which the company's multiples approach historical averages. If profit remains at the level of the last twelve months and the market valuation stays unchanged, the share could rise. But if the interest margin narrows or asset quality deteriorates, the forecast may not materialise.

For the investor, it is important to understand that the portal's model is an analytical tool, not a guarantee of returns. It provides a benchmark, but the decision should also take into account other factors: the dividend yield of 2.3%, the concentration of income and the lack of data on fee income.

Valuation on the latest reported figures

Bottom line

Lion Finance Group delivered strong profit growth in the second quarter of 2026: net profit rose 20.6% to 618.8 million lari, while net interest income increased 20.8% to 1,282.7 million lari. A return on equity of 27.1% and a P/E of 8.9 make the share undervalued, and the portal's model points to 40% upside. However, profit still depends on interest income, fee income is not disclosed, and the dividend yield is only 2.3%. The question for a holder now is whether the high interest margin will persist and whether the bank will increase income diversification.

On 13 August, Scandinavian Tobacco Group reported Q2 2026 results. Revenue declined 1.2% year-on-year to DKK 2,334.0 million, EBITDA rose 0.5% to DKK 493.7 million, and net profit fell 4.4% to DKK 216.9 million. The EBITDA margin improved to 21.2% from 20.8% a year earlier. At the current price, the stock trades at 6.81 EV/EBITDA LTM versus its 3-year average of 6.66, and the dividend yield of 6.1% looks attractive, but the portal's model points to 9% downside. Verdict – neutral.

Key takeaways

— Q2 2026 revenue declined 1.2% year-on-year to DKK 2,334.0 million

— Q2 2026 EBITDA rose 0.5% to DKK 493.7 million, with margin up to 21.2%

— Q2 2026 net profit fell 4.4% to DKK 216.9 million

— Operating cash flow over the last 12 months was DKK 869.9 million, with capex of DKK 35.3 million in the quarter

— Net debt at 30 June 2026 was DKK 4.9 billion, down from DKK 5.2 billion a year earlier

— Dividend yield over the last 12 months is 6.1%

— EV/EBITDA LTM of 6.81x is slightly above the 3-year average of 6.66x

Attractiveness

Key figures, DKK bn

Q2 2026 revenue declined 1.2% year-on-year to DKK 2,334.0 million

Q2 2026 revenue was DKK 2,334.0 million, down 1.2% from the same period last year. The decline is modest but continues the trend: in Q1 2026 revenue was DKK 1,859.2 million, also below the prior-year level. The company did not disclose reasons in the provided facts, so we simply note that sales slipped slightly.

For a tobacco business, such a move could be due to demand fluctuations or currency effects, but without confirmation from the report we do not assign a cause. Importantly, the revenue decline did not lead to an EBITDA decline – meaning the company managed to offset lower sales either through pricing or cost structure.

Q2 2026 EBITDA rose 0.5% to DKK 493.7 million, with margin up to 21.2%

Q2 2026 EBITDA was DKK 493.7 million, up 0.5% year-on-year. The EBITDA margin improved to 21.2% from 20.8% last year. Margin growth on declining revenue means the company cut costs or improved its sales mix.

Operating profit for the quarter was DKK 339.3 million. The operating margin was 14.5%, above the average of recent quarters. This indicates that even with a slight revenue decline, the company maintains control over expenses.

Q2 2026 net profit fell 4.4% to DKK 216.9 million

Q2 2026 net profit was DKK 216.9 million, down 4.4% year-on-year. The net margin fell to 9.3% from 9.6%. Profit declining while EBITDA grows indicates additional expenses below the operating line – possibly interest or taxes.

Over the last 12 months, net profit was DKK 651.2 million. This is the level earned over the year and is important for the dividend base. The 4.4% quarterly profit decline is not critical, but it shows that EBITDA growth does not fully flow through to net profit.

Operating cash flow over the last 12 months was DKK 869.9 million, with capex of DKK 35.3 million in the quarter

Operating cash flow over the last 12 months was DKK 869.9 million. In Q2 2026 it was DKK 295.4 million, significantly higher than DKK 149.5 million a year earlier. Such cash flow growth on declining revenue indicates improved working capital management.

Capex for the quarter was DKK 35.3 million, slightly below DKK 40.1 million a year earlier. The company invests moderately, allowing it to generate free cash flow. Over the last 12 months, capex was at a level that does not create excessive pressure on the balance sheet.

Net debt at 30 June 2026 was DKK 4.9 billion, down from DKK 5.2 billion a year earlier

Net debt at 30 June 2026 was DKK 4,880.3 million, or DKK 4.9 billion. A year earlier, at 30 June 2025, it was DKK 5,158.4 million, or DKK 5.2 billion. The 12-month reduction was DKK 0.3 billion. This is a positive signal, although debt load remains significant.

The net debt to EBITDA ratio over the last 12 months is 3.12. This is a moderate level that the company likely considers comfortable. Interest on debt probably consumes part of operating profit, explaining the net profit decline despite EBITDA growth.

Dividend yield over the last 12 months is 6.1%

The dividend yield over the last 12 months is 6.1%. This is a high level, making the stock attractive for income-oriented investors. The company pays dividends, and the current yield exceeds that of many debt instruments.

With net profit over the last 12 months of DKK 651.2 million and a market capitalisation of DKK 5,773.3 million, dividend payments represent a significant portion of profit. If profit declines, the company may be forced to cut the dividend. However, current cash flow appears sufficient to sustain payments.

EV/EBITDA LTM of 6.81x is slightly above the 3-year average of 6.66x

EV/EBITDA LTM is 6.81. The 3-year average of this multiple is 6.66. Thus, the stock trades slightly above its historical norm. This may limit upside potential if profit does not start growing faster.

P/E LTM is 8.87, which also does not look cheap for a company with declining revenue. The portal's model estimates the fair value of the share at 9% below the current market price. This is another argument for a cautious view on valuation.

Valuation on the latest reported figures

Bottom line

In Q2 2026, Scandinavian Tobacco Group reported a 1.2% decline in revenue and a 4.4% drop in net profit, but EBITDA rose 0.5% and the margin improved to 21.2%. Operating cash flow over the last 12 months was DKK 869.9 million, and net debt fell to DKK 4.9 billion. The 6.1% dividend yield supports interest in the stock, but EV/EBITDA is slightly above its historical average, and the portal's model points to 9% downside. Verdict – neutral: strong cash flows and dividend are offset by weak revenue and profit dynamics, with no clear growth driver.

Imperial Brands has reported results for the first half of 2026. Revenue came in at GBP 14,719.0 million, up just 0.8% year on year, while operating profit was GBP 925.0 million. Net debt as of 31 March 2026 stood at GBP 10,943.0 million, with net debt to LTM EBITDA at 2.83. With a market capitalisation of GBP 18,189.0 million and a trailing 12-month dividend yield of 6.7%, the stock looks rather attractive for an income-oriented holder, but weak revenue growth and no clear improvement in leverage limit re-rating potential.

Key takeaways

— Revenue in H1 2026 grew only 0.8% year on year to GBP 14,719.0 million – growth is barely visible

— Operating profit in H1 2026 was GBP 925.0 million on revenue of GBP 14,719.0 million, implying a margin of about 6.3%

— Net debt as of 31 March 2026 was GBP 10,943.0 million, and its ratio to LTM EBITDA was 2.83, higher than many tobacco peers

— The trailing 12-month dividend yield is 6.7%, well above the yield on most debt instruments

— A market capitalisation of GBP 18,189.0 million against net debt of GBP 10,943.0 million means debt is about 60% of market cap

— On the portal's model, the fundamental value of the share is 80% below the current market price, indicating a significant market premium to the model

— The trailing 12-month P/E is 8.78, below the broad market average but above some tobacco companies

Attractiveness

Key figures, GBP bn

Revenue in H1 2026 grew only 0.8% year on year to GBP 14,719.0 million – growth is barely visible

Imperial Brands' revenue in the first half of 2026 was GBP 14,719.0 million, just 0.8% more than in the same period a year earlier. Such growth barely covers inflation and suggests the company cannot significantly increase sales in volume terms or through price increases.

Imperial Brands' core business – tobacco products – is stagnating or slowly declining in most developed countries. The company compensates with price increases and the development of alternative products, but in the reporting period these measures did not lead to a noticeable acceleration in revenue.

For an investor, this means that profit and dividend growth in the coming years will likely come not from higher sales but from cost cuts and share buybacks. Without an acceleration in revenue, the room for market-cap growth is limited.

Operating profit in H1 2026 was GBP 925.0 million on revenue of GBP 14,719.0 million, implying a margin of about 6.3%

Imperial Brands' operating profit in the first half of 2026 was GBP 925.0 million. With revenue of GBP 14,719.0 million, this implies a margin of about 6.3%.

Such a low operating margin for a tobacco company may be explained by one-off write-offs, restructuring costs or asset impairments. Without these factors, profit could have been higher, but they are reflected in the reported figures as they are.

To assess the sustainability of the business, it is important to understand how typical this margin is. If it is lower than in previous periods, it could signal pressure on prices or rising costs. However, without data for the same period last year, we cannot say whether the situation has improved or worsened.

Net debt as of 31 March 2026 was GBP 10,943.0 million, and its ratio to LTM EBITDA was 2.83, higher than many tobacco peers

Imperial Brands' net debt as of 31 March 2026 was GBP 10,943.0 million. Over the last 12 months, EBITDA was GBP 3,861.4 million, giving a net debt to EBITDA ratio of 2.83.

This is a moderate level of leverage, but it is higher than some competitors in the tobacco sector. For a company with low revenue growth, such debt requires stable cash generation to service and gradually reduce.

It is worth noting that net debt rose from GBP 8.2 billion on 30 September 2025 to GBP 10.9 billion on 31 March 2026, an increase of GBP 2.8 billion. Over 12 months, from 31 March 2025 to 31 March 2026, net debt rose from GBP 10.5 billion to GBP 10.9 billion, i.e. by GBP 0.5 billion. This suggests the company is not yet reducing debt and in some periods is even increasing it.

The trailing 12-month dividend yield is 6.7%, well above the yield on most debt instruments

Imperial Brands' trailing 12-month dividend yield is 6.7%. This is a high figure that makes the stock attractive to income-oriented investors.

With a market capitalisation of GBP 18,189.0 million and trailing 12-month net profit of GBP 2,071.0 million, the payout ratio can be estimated as moderate. However, the company did not disclose the exact dividend amount for the latest period in the provided facts, so we cannot name a specific payment.

For comparison, a yield of 6.7% significantly exceeds bank deposit rates and government bond yields in most developed countries. This provides a cushion for investors but may also signal risks that the market is pricing into the stock.

A market capitalisation of GBP 18,189.0 million against net debt of GBP 10,943.0 million means debt is about 60% of market cap

Imperial Brands' market capitalisation is GBP 18,189.0 million, while net debt is GBP 10,943.0 million. Thus, debt is about 60% of market cap, which is a high figure for a company with low revenue growth.

This means that a significant portion of the company's value is financed by debt, and any changes in cash flow or interest rates could materially affect equity valuation.

For an investor, this creates both risk and potential opportunity: if the company can reduce debt or increase EBITDA, the share price could rise. However, with stagnant revenue, this would require either cost cuts or asset sales.

On the portal's model, the fundamental value of the share is 80% below the current market price, indicating a significant market premium to the model

According to the portal's model, the fundamental value of Imperial Brands' share is 80% below the current market price. This means the market values the company significantly above what our model, based on EBITDA growth and a target multiple, suggests.

Such a discrepancy may be explained by the model not accounting for certain factors important to investors, such as the stability of dividend payments or potential restructuring. However, it also serves as a signal that the stock may be overvalued relative to fundamental metrics.

Investors should note that the portal's model is just one valuation tool, and its result is not a target price or a recommendation. Nevertheless, such a significant divergence deserves attention when making investment decisions.

The trailing 12-month P/E is 8.78, below the broad market average but above some tobacco companies

Imperial Brands' trailing 12-month P/E is 8.78. This is below the broad stock market average, which may indicate the stock is undervalued relative to the wider market.

However, some tobacco companies have even lower multiples, due to higher profitability or lower debt. For Imperial Brands, 8.78 is a moderate figure, reflecting both the stability of the business and the risks associated with leverage and stagnant revenue.

A comparison with the company's historical P/E would be useful, but the provided facts do not include a three-year average. We therefore limit ourselves to stating the current level.

Valuation on the latest reported figures

Bottom line

Imperial Brands delivered stable but unimpressive results for the first half of 2026: revenue grew only 0.8%, operating profit was GBP 925.0 million. Net debt remains high at GBP 10,943.0 million, with a net debt to LTM EBITDA ratio of 2.83. A dividend yield of 6.7% and a low P/E of 8.78 make the stock attractive for income-oriented investors, but weak growth and leverage limit the potential for market-cap appreciation. On the portal's model, the fundamental value of the share is 80% below the current price, indicating overvaluation relative to the model. Overall, the stock looks rather attractive for holders willing to tolerate moderate risks for a high dividend.