Essity (OM:ESSITY B) Stock Faces Softer Q2 EPS Challenging Bullish Margin Expansion Narrative

Essity (OM:ESSITY B) has reported Q2 2026 revenue of SEK 35.1b and basic EPS of 3.94 SEK, with trailing twelve month net income of SEK 12.1b framing the latest set of numbers. The company has seen quarterly revenue move between SEK 34.2b and SEK 35.1b over the past five reported quarters, while basic EPS has ranged from 3.94 SEK to 4.86 SEK, and on a trailing twelve month basis EPS now sits at 17.73 SEK. With trailing net margins at 8.8%, these results keep the focus firmly on how efficiently Essity is turning its sales base into bottom line earnings.

See our full analysis for Essity.

With the latest figures on the table, the next step is to see how Essity's reported margins and earnings trends line up with the key narratives investors have been using to frame the stock.

See what the community is saying about Essity

Essity margins holding at 8.8%

• Essity's trailing twelve month net profit is SEK 12.1b on SEK 137.6b of revenue, which works out to an 8.8% net margin compared with 8.6% a year earlier in the risk and reward data.
• Supporters in the bullish narrative point to premium product mix and digitalisation as margin drivers. However, the current 8.8% margin and Q2 2026 net income of SEK 2.7b show only a modest uplift so far, which means:
  • The five year annualised earnings growth rate of 14.7% fits the bullish view of a strong earnings record, but the recent year of declining earnings growth in the dataset shows that margin expansion is not a straight line.
  • Forecast earnings growth of about 6.7% per year is lower than the longer term history, so bulls expecting a sharper margin lift than the current 8.8% may be assuming that product mix and pricing will offset any slower top line progress.

Get a closer look at how bulls think Essity could extend its margin story beyond the current 8.8% net level with the 🐂 Essity Bull Case.

Essity valuation: 15.8x P/E vs peers

• Essity trades on a trailing P/E of 15.8x compared with 17.3x for the global Household Products group and 22.7x for peers. A DCF fair value of SEK 631.70 sits well above the current share price of SEK 282.80 and the analyst price target of SEK 272.27.
• Analysts' consensus narrative sees steady but slower growth than the wider Swedish market, and the current multiples echo that, because:
  • Revenue is expected to grow around 3% per year and earnings about 6.7% per year, which is below the Swedish market forecasts referenced in the risk and reward summary, aligning with a P/E that sits below peer levels.
  • The gap between the DCF fair value of SEK 631.70 and the share price of SEK 282.80 is larger than the difference to the SEK 272.27 analyst target, so the market is currently closer to the analyst narrative than to the DCF outcome.

Q2 2026 EPS below recent peaks

• Q2 2026 basic EPS of 3.94 SEK and net income of SEK 2.7b sit below recent quarterly highs, such as Q3 2025 EPS of 4.86 SEK on SEK 3.3b of net income, while trailing EPS of 17.73 SEK is slightly below the 18.37 SEK level reported three quarters earlier in the trailing series.
• Critics in the bearish narrative focus on pressure from costs, competition and regulation, and the recent EPS pattern touches that concern in a few ways:
  • The latest two quarters show net income of SEK 2.9b in Q1 2026 and SEK 2.7b in Q2 2026 compared with SEK 3.3b in Q3 2025, which fits the bearish view that it may be harder to push pricing or volumes enough to lift profits every period.
  • At the same time, the five year annualised earnings growth rate of 14.7% indicates that the business has produced higher profits over time, so the recent softer run rate does not fully match a scenario where structural pressures overwhelm the income statement.

Sceptics point to slowing EPS and rising costs, but the five year earnings track record tells a more mixed story, which you can see unpacked in the 🐻 Essity 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 Essity on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Given the mixed signals around Essity's earnings and valuation, it makes sense to look through the details yourself and decide what really matters for you. To see why some investors are focusing on the potential upside, take a moment to review the 3 key rewards.

Explore Alternatives Beyond Essity

Essity's recent quarters show earnings and EPS below prior peaks, with Q2 2026 results not fully matching the stronger periods highlighted in the longer term record.

If you are concerned that Essity's softer recent earnings pattern could limit potential returns, it is worth checking the 224 high quality undervalued stocks right now to see stocks where current pricing may better reflect upside potential.

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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