ASSA ABLOY just posted its Q3 2026 scorecard with record quarterly sales above SEK 40b and record EBIT above SEK 7b, yet the stock closed at SEK 381.3 on 27 October with only a modest uplift over recent weeks. The headline is margin power. An EBIT margin of 17.4% and earnings per share of 4.24 SEK pulled ahead of the broader story the share price seems to be telling. Short term traders focused on a steady chart. The fundamentals pointed to a stronger profitability narrative than the one day reaction implied.
Like the record Q3 margins at ASSA ABLOY but want more ideas with strong profitability profiles and balance sheets behind them? Put these results in context by comparing them with stocks in our list of solid balance sheet and fundamentals stocks (207 results) .
Q3 2026 Earnings Summary
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Revenue (Q3 2026 vs Q3 2025):40,771m SEK vs 38,146m SEK (up about 6.9%)
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Net Income (Excl. Extra Items, Q3 2026 vs Q3 2025):4,715m SEK vs 4,149m SEK (up about 13.6%)
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Basic EPS (Q3 2026 vs Q3 2025):4.24 SEK vs 3.74 SEK (up about 13.6%)
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EBIT Margin (Q3 2026 vs Q3 2025):17.4% vs about 16.8% (up about 0.6 percentage points, highlighting the margin focus at ASSA ABLOY)
Earnings tell you how Q3 landed, but investors who care about what they are paying for ASSA ABLOY usually focus on the cash the business produces over time. When you line up ASSA ABLOY's cash flows against the current share price, the stock could be a solid 28% undervalued .
Evaluating ASSA ABLOY's Cash And Margin Ambitions
The bullish view hinges on ASSA ABLOY turning mix shift and cash strength into a higher quality earnings profile rather than just bigger numbers.
"Bullish analysts expect ASSA ABLOY to continue shifting its mix toward higher margin electromechanical, digital and recurring revenue solutions, while maintaining strong cash generation and disciplined acquisitions."
Q3 points in that direction. Electromechanical products grew faster than the group and seven quarters of positive organic progress support the mix shift claim. Group EBIT margin at 17.4% sits above the high end of the 16 to 17% target range. Operating cash flow growth and net debt to EBITDA around 2x back the disciplined acquisition storyline, with 11 deals year to date and further portfolio pruning through the HID PKI divestment.
Not everyone reads the same price the same way. → See the higher figure this Narrative lands on, and how it gets there .
ASSA ABLOY Bear Case: China And Deals Under the Microscope
The cautious view hinges on regional drag and acquisition hiccups becoming more than temporary noise. The key fear is explicit.
"Although acquisition capacity is supported by net debt to EBITDA of around 2.1 to 2.2x and cash conversion above 100%, the margin dilution and underperformance from the Level Lock acquisition suggest that further deal making could drag on EBIT and earnings quality if integration issues recur."
Q3 shows this risk is still alive. Management again flagged Level Lock as roughly 100 basis points dilutive, and M&A weighed on Entrance Systems margins. At the same time, group EBIT margin reached 17.4% with APAC organic revenue slightly weaker and Greater China still declining, so portfolio execution issues have not yet derailed profitability targets.
Hunt For Mispriced Earnings Power
ASSA ABLOY just showed how a strong profitability story can sit beside a muted share price move. The real opportunity sits in finding stocks that could be undervalued before the market corrects them.
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Company 1 - 44% below our estimate - converts a completed capacity expansion and efficiency program into higher utilization and a richer aluminum product mix.
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Company 2 - 45% below our estimate - leans into electrification projects as new grid cable capacity ramps and an acquisition extends access to power networks.
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Company 3 - 38% below our estimate - supplies high voltage connectors that utilities adopt as grid projects shift toward higher margin AC and potential HVDC installations.
That is three of the list. See the full list of 195 companies trading below our fair value estimates →
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include ASSA-B.ST .
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