Afry (OM:AFRY) Stock Faces Margin Slippage That Tests Bullish Earnings Narratives

Afry (OM:AFRY) has put fresh numbers on the table for Q2 2026, with revenue of about SEK6.5b and basic EPS of SEK1.71. This sets the stage for investors to reassess the story around its recent profit trends. The company has seen quarterly revenue move between roughly SEK5.7b and SEK6.7b over the last six reported periods, while basic EPS has ranged from SEK1.21 to SEK2.21. This gives a clearer view of how the earnings line has tracked against a relatively tight revenue band. With a trailing 12 month net profit margin of 3.1% and earnings quality assessed as high, the spotlight now turns to whether Afry can translate its margin profile into the kind of earnings trajectory investors want to see.

See our full analysis for Afry.

With the headline figures in place, the next step is to set these fresh results against the most widely held narratives about Afry to see which views the latest numbers support and which they call into question.

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TTM margin at 3.1% with mixed EPS pattern

• Over the last six quarters, Afry's basic EPS has moved between SEK1.21 and SEK2.21, while trailing 12 month net income sits at SEK790 million on SEK25.2b of revenue, which works out to a 3.1% net margin versus 3.6% a year earlier.
• Consensus narrative points to restructuring and portfolio optimisation as drivers of better efficiency. However, the current 3.1% margin and the weaker quarters like Q3 2025 at SEK137 million of net income show that utilisation and cost control still matter a lot for how much of that revenue actually turns into profit.
  • Supporters of the consensus view highlight ongoing cost reduction initiatives and a new group structure. At the same time, the year on year step down in margin signals that these changes have not yet translated into higher trailing profitability.
  • The forecast that margins could rise from 3.1% to around 6.9% over three years sits in clear contrast with the recent margin compression. Investors will likely watch whether upcoming quarters look more like the stronger Q1 2026, with SEK240 million of net income, or the softer periods in 2025.

Afry valuation gap versus DCF fair value

• Afry trades at a trailing P/E of 14.9x against a peer average of 19.2x and an industry average of 17.2x, while the current share price of SEK104 is well below the DCF fair value of about SEK265.41.
• Bulls argue that exposure to themes like energy transition and digital services, combined with high assessed earnings quality, makes this valuation gap interesting. However, the 3.1% net margin and trailing 12 month net income of SEK790 million show that the optimistic forecasts still need to be reconciled with relatively modest profitability today.
  • On the bullish side, forecasts embedded in the data point to earnings growth of about 25.6% per year with revenue up around 3.9% per year, and the DCF fair value more than double the current price is often cited as support.
  • At the same time, the multi year EPS trend in the dataset shows an annual decline of about 3.4%, so anyone leaning into the bullish view is effectively saying the future will look very different from the last five years.

Afry's latest numbers give bulls fresh fuel to compare that 14.9x P/E and SEK104 share price against the higher DCF fair value narrative, and see how far they think the stock can close that gap before the next set of results.🐂 Afry Bull Case

Margins, restructuring and the cautious view

• The trailing 12 month margin slip from 3.6% to 3.1%, alongside restructuring costs flagged at SEK200 million to SEK300 million, lines up with a picture where profitability is being reshaped but is not yet clearly stronger in the reported figures.
• Bears focus on issues like lower utilisation across divisions and the scale of ongoing restructuring, and the recent pattern of quarterly net income ranging from SEK137 million to SEK250 million gives them tangible data points to question how quickly Afry can lift earnings quality in practice.
  • Critics highlight that persistent underemployment of staff and integration work around acquisitions such as Reta Engenharia could keep pressure on margins, which is consistent with the modest 3.1% trailing net margin.
  • However, the fact that Afry has still produced SEK790 million of net income over the last year with earnings quality assessed as high challenges the idea that the business is structurally impaired, and instead suggests execution on utilisation and cost savings will be the key swing factor.

Bears point to the 3.1% margin, restructuring bill and volatile quarterly profits as reasons to stay cautious, and use these numbers to test whether Afry's planned efficiency gains are enough to justify taking on that operational risk.🐻 Afry Bear Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Afry on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

With Afry, the latest results and valuation debate point in different directions, so it makes sense to review the underlying data yourself and decide how convincing each side feels. To weigh the balance between the concerns and the potential upsides in one place, start with the 3 key rewards and 1 important warning sign.

See What Else Is Out There Beyond Afry

Afry's 3.1% trailing net margin, restructuring costs and uneven quarterly earnings indicate that current profitability may not fully align with the stronger narrative some investors have in mind.

If you prefer stocks where the current fundamentals appear more robust, head over to the screener containing 506 high quality undiscovered gems to quickly compare companies that may offer clearer earnings profiles today.

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.

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