Lagercrantz Group entered this Q2 2027 report with a strong growth reputation and a rich valuation to match, trading on a trailing P/E of 34x while the share price had slipped about 6% over the past week. The headline today is earnings strength that still looks robust, with Q2 net income at SEK 340m and basic EPS at SEK 1.65, set against a share price of SEK 219.40 at Friday's close.
The expectation gap for investors lies in profitability. An EBITA margin for the quarter of 17.8% and a trailing net profit margin of 11.5% suggest a business still delivering healthy economics even as the stock has eased in recent weeks.
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Q2 2027 Earnings Summary
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Revenue (Q2 2027 vs Q2 2026):SEK 2,990m vs. SEK 2,457m (up 21.7%)
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Net Income (Q2 2027 vs Q2 2026):SEK 340m vs. SEK 260m (up 30.8%)
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Basic EPS (Q2 2027 vs Q2 2026):SEK 1.65 vs. SEK 1.26 (up 30.7%)
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EBITA Margin (Q2 2027 vs Q2 2026):17.8% vs. 16.9% (modest margin improvement)
Earnings get most of the attention, but investors who care about what they are paying for Lagercrantz Group often focus on the cash coming through the door instead of just the income statement. Looking at Lagercrantz Group's cash flows alone, the stock could be a modest 6% undervalued .
Lagercrantz bullish targets meet mixed execution
Supporters point to Lagercrantz using acquisitions and proprietary products to push earnings quality higher.
"Management has raised its financial ambitions with a 20% EBITA margin target within 2 to 3 years and a higher profit over working capital goal of 60%, which, if achieved, would lift group margins and capital efficiency above the levels currently reported."
The latest EBITA margin of 17.8% and roughly 17.4% year to date shows tangible progress toward the 20% ambition, while profitable working capital already exceeds 60%. M&A cadence is on track, with 8 deals in the first half adding about SEK 660m of sales, which aligns with the 10% external growth aim.
Bear case focuses on M&A strain and weak spots
Critics worry that the same acquisition push could stretch Lagercrantz and keep margins from reaching those higher goals.
"The company's heavy reliance on ongoing acquisitions to fuel growth increases integration risks and the potential for goodwill impairments, which could depress reported net income and elevate balance sheet risks if newly acquired businesses underperform, especially when recent deals have already added roughly SEK 1.4b to 1.5b of revenue and are an important contributor to earnings."
Recent results show 12% organic growth and 22% total revenue growth, so expansion is not purely deal driven. Group EBITA increased 21% in Q2 and return on equity sits at 31%, which suggests acquired units are contributing positively, although weaker Control margins and restructuring costs underline that integration and underperforming assets still require careful monitoring.
One Narrative disagrees with today's price. → See where this Narrative says Lagercrantz Group should trade .
Hunt For Mispriced Earnings Power
Lagercrantz Group illustrates how a rich multiple can sit alongside solid reported profitability. The real opportunity is finding stocks that appear undervalued before the market closes that gap.
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Company 1 - 45% below our estimate - targets higher margin composite content as airframe builders increase production and pursue lighter structures.
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Company 2 - 23% below our estimate - leans into branded packaged foods and beer volumes as consumers allocate spending to staples and leisure drinks.
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Company 3 - 28% below our estimate - books grid and energy transition cable projects as utilities upgrade infrastructure and developers secure capacity for renewable links.
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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 LAGR-B.ST .
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