Tele2 stock closed at SEK161.05 on the day its Q3 2026 results hit the market, after a choppy month that left the 30 day return down about 4%. The headline story was not the top line. It was profit quality. Basic earnings per share reached 2.03 SEK and net income from ongoing operations came in at SEK1,410m, numbers that sit inside a much bigger tension for you as an investor: strong recent profitability versus forecasts that point to declining earnings over the next few years.
Like the earnings power of Tele2 but wary of forecasts that point to weaker profits ahead? Explore companies that combine solid recent profitability with outlooks that are not trending downward in our 188 high quality undervalued stocks
Q3 2026 Earnings Summary
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Revenue (Q3 2026 vs. Q3 2025):SEK7,603m vs. SEK7,442m (up about 2%)
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Net Income from Ongoing Operations (Q3 2026 vs. Q3 2025):SEK1,410m vs. SEK1,290m (up about 9%)
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Basic EPS (Q3 2026 vs. Q3 2025):SEK2.03 vs. SEK1.86 (up about 7%)
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Net Profit Margin, Trailing 12 Months (to Q3 2026 vs. to Q3 2025):33.8% vs. 14.6% (margin more than doubled year on year)
Earnings grab the headline, but investors who care about what a business is really worth usually follow the cash flowing through the door. Tele2's recent report puts profits in focus, yet the cash generation story may matter even more for valuation.
On cash flows alone, Tele2's current price could tell a different story about OM:TEL2 B, and if you run those cash streams through a valuation model, the stock could be a striking 42% undervalued .
Tele2 Bull Case Leans Heavily On Cash Milestones
The bullish story around Tele2 leans on efficiency, AI and Baltic cash to keep payouts intact even as Swedish competition bites.
"The main thing that has to go right is Tele2 sustaining cash generation and disciplined CapEx while facing fierce Swedish consumer competition and absorbing the EBITDA impact from the Baltic tower transaction so that high cash distributions remain compatible with its investment grade profile."
On that yardstick, Q3 delivered. Equity free cash flow reached SEK2.3b in the quarter and SEK6.7b over 12 months, guidance now points to CapEx below 10% of sales, and leverage around 1.5x, or 1.8x after the latest dividend, keeps the balance sheet within investment grade territory.
That disagreement has a full argument behind it. → Uncover the higher Fair Value this Narrative argues for .
Tele2 Bear Case: Swedish Strain, Baltic Cushion
The cautious view argues that Tele2's Swedish pressure and rising input costs will slowly chip away at earnings power even if the Baltics keep delivering.
"Bearish analysts expect Tele2 to see Swedish margin pressure persist as aggressive pricing in fixed broadband and low-end mobile, together with inflation in hardware and components, limits further upside to EBITDAaL."
Sweden is not breaking this claim. Fixed broadband revenue declined 3% and Tele2 is avoiding unhealthy open fiber deals, which caps volume and pricing power. Hardware inflation risks are visible in supply constraints and CapEx phasing. At the same time, Baltic EBITDAaL grew 9% organically with roughly 80% cash conversion, which offsets some of that Swedish drag for now.
Hunt Quiet Disconnects In Cash
Tele2 shows how reported earnings may contrast with cautious forward expectations. The real opportunity could sit in stocks the market has not fully repriced yet.
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Company 1 - 34% below our estimate - raises long term capital into tax efficient funds financing renewable infrastructure and real assets.
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Company 2 - 25% below our estimate - secures large multi year defense contracts as governments commit higher budgets to modern equipment and complex systems.
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Company 3 - 37% below our estimate - tightens focus on core Asian fans while staggering new content and merchandise launches over later quarters.
That is three of the list. See the full list of 188 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 TEL2-B.ST .
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