Nelly Group entered this Q3 2026 report with the stock at SEK37.8, up modestly over the past month and trading on a trailing P/E of 8.9x that looks low versus peers. The headline result is a sturdier profit line than the share price reaction might suggest, with basic earnings per share at 1.02 SEK and net income at SEK30.6m. The main issue is not the quarter in isolation; it is the squeeze in profitability and the reliance on non cash earnings that sit behind those numbers and challenge the long term bullish thesis.
Appreciate the seemingly cheap 8.9x P/E on Nelly Group but uneasy about profits leaning on non cash items and a squeezed margin story. For investors who want value style stocks with stronger balance sheets backing up their earnings, it is worth benchmarking Nelly against our list of solid balance sheet and fundamentals stocks (204 results)
Q3 2026 Earnings Summary
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Revenue (Q3 2026 vs Q3 2025):SEK313.1m vs. SEK283.7m (up 10.3%)
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Net Income (Excl. Extra Items, Q3 2026 vs Q3 2025):SEK30.6m vs. SEK41.5m (down 26.3%)
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Basic EPS (Q3 2026 vs Q3 2025):SEK1.02 vs. SEK1.38 (down 25.9%)
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Operating Margin (Q3 2026 vs Q3 2025):13.5% vs. 15.3% (down 1.8 percentage points)
Nelly Group is betting its turnaround on trendier assortments. Ask Charlie what Nelly Group risks if viral hits don't return .
Nelly Group: Revenue Momentum Versus Margin Strain
Nelly Group does offer something for optimists. Top line grew 10.3% to SEK313.1m with gross profit up and gross margin broadly steady at 56.5%. Own brand mix increased to 66.9%, which can support pricing power over time if trends hit. The balance sheet looks comparatively resilient with SEK221.4m of cash and an equity ratio of 44.6%, even after a SEK30m buyback. For a fashion ecommerce player trying to lean into brand and assortment, that mix of growth plus funding headroom keeps the bullish story alive, provided execution improves.
Margin Compression, Inventory Build Test Confidence
The caution flags are hard to ignore. Operating profit slipped to SEK42.4m and margin narrowed to 13.5% as marketing and fulfillment took a larger share of sales. This underlines reliance on paid traffic and discounting. Inventory of SEK248.7m and negative operating cash flow of SEK30.1m point to working capital pressure heading into a promotional Q4. Management still talks about transformation and assortment work in progress. This means the model is carrying execution and demand risk while margins are already tight. That backdrop clearly feeds the bearish narrative.
After inventory pressure, shrinking operating margin and a volatile SEK37.8 share price, it is fair to ask whether these are isolated issues or part of a broader pattern of fragility. Review the independent risk analysis for Nelly Group which shows 2 important warning signs
Hunt For Mispriced Earnings Power
Nelly Group shows how a headline profit story can still leave investors questioning the quality behind the earnings. The real opportunity is finding stocks that could be undervalued before the market corrects them.
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Company 1 - 27% below our estimate - uses non invasive orthopedic devices and patient care clinics to deepen ties with hospitals and surgery centers.
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Company 2 - 45% below our estimate - supplies lightweight composite structures that aircraft makers increasingly rely on for both new builds and aftermarket upgrades.
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Company 3 - 36% below our estimate - advises on complex capital markets and private transactions as clients shift toward larger, higher fee mandates across cycles.
Three companies from the same screener. Open the full list of 192 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 NELLY.ST .
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