Epiroc came into its Q3 2026 report with a premium valuation and a stock that had drifted lower in recent weeks, down about 4% over seven days and 3% over a month. Expectations were high. The headline print showed what long term followers care about most in this mining equipment group: orders and profitability, with organic orders up solidly and an adjusted operating margin at 20.4%.
The share price closed at SEK247.8 on the day of the release, soft against that backdrop. The gap between a slightly tired share price and firm order and margin numbers is where the debate now sits.
Love Epiroc's solid Q3 orders and 20.4% margin but uneasy about paying up when the share price already carries a premium? Compare that setup with stocks screened for quality and stronger valuation support in our 191 high quality undervalued stocks
Q3 2026 Earnings Summary
-
Revenue (Q3 2026 vs. Q3 2025):SEK 16,775m vs. SEK 15,242m (up about 10%)
-
Net Income, excl. extra items (Q3 2026 vs. Q3 2025):SEK 2,417m vs. SEK 1,955m (up about 24%)
-
Basic EPS (Q3 2026 vs. Q3 2025):SEK 2.00 vs. SEK 1.62 (up about 24%)
-
Adjusted Operating Margin (Q3 2026 vs. Q3 2025):20.4% vs. 19.0% (improvement of about 1.4 percentage points)
Epiroc's Q3 income statement looks strong, yet cash generation is what many valuation focused investors ultimately lean on when they judge a price tag.
Based on Epiroc's cash flows alone and the way those streams are valued in a discounted cash flow model, the stock could be a solid 18% overvalued .
Epiroc's Bull Story Meets Q3 Reality
The bullish pitch hinges on Epiroc turning mining technology and an aging fleet into richer, more repeatable business.
"A large, aging fleet with an average age of 8.6 years and customer share above 50%, while only about one third of the fleet is on service contracts, provides room to grow service penetration, which can support revenue resilience and operating margins."
Q3 gives that claim real backing. Service made up 67% of revenue, with service orders up 13% organically and strong demand for midlife rebuilds and digital offerings. Adjusted operating margin reached 20.4%, and both segments posted healthier profitability. This supports the idea that higher service intensity is starting to show up in the margins.
One Narrative has put a figure on that disagreement. → See the Narrative with its higher Fair Value, assumptions and all .
Epiroc Bear Case: Cost Shocks Still Unresolved
The cautious view argues that Epiroc's margin story is fragile when input and trade costs move against it.
"Rising input costs, such as tungsten prices that more than doubled in 2025 and tariffs that reduced the group operating margin by just below 0.5 percentage points in Q4, highlight how sensitive the model is to external cost shocks."
Q3's 20.4% adjusted operating margin and healthier profitability in both segments challenge the idea that cost inflation inevitably eats into earnings. Tungsten surcharges now sit outside reported revenue and Tools & Attachments posted its best margin since early 2024. The pressure has not vanished though. Cash conversion slipped to 78% and working capital absorbed cash, so the full cost of protecting margins is not yet behind Epiroc.
Hunt For Mispriced Quality Setups
Epiroc shows that strong orders and firm margins do not always move the share price immediately. The real opportunity is spotting stocks that could be undervalued before the gap closes.
-
Company 1 - 22% below our estimate - builds on steady demand for everyday staples and drinks while tilting toward higher margin packaged and prepared foods.
-
Company 2 - 48% below our estimate - turns a trading-heavy client base into long term investors as savings products, options and tax wrappers deepen platform engagement.
-
Company 3 - 25% below our estimate - wins complex grid upgrade and energy transition cable projects that lock in multi year manufacturing backlogs and higher value contracts.
Those are three of them. See all 191 potentially undervalued companies →
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 EPI-A.ST .
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
