Is Essity (OM:ESSITY B) Fully Valued As Sales Rise But Earnings Slip?

Essity (OM:ESSITY B) has drawn investor focus after reporting second quarter and first half 2026 results, with quarterly sales higher year on year but net income and basic earnings per share lower.

See our latest analysis for Essity.

Essity's share price has climbed steadily, with a 30 day share price return of 4.51% and a 90 day share price return of 12.52%. The 1 year total shareholder return of 17.49% suggests momentum has been positive over a longer horizon despite the recent earnings pressure.

If Essity’s latest move has you thinking about where else growth and income could come from, now is a good time to scan 107 top founder-led companies

Bulls point to Essity’s resilient sales and strong recent share price; bears focus on the softer earnings trend and a price now above the analyst target. Do the current fundamentals still leave the stock looking undervalued?

Most Popular Narrative: 5.8% Overvalued

Essity last closed at SEK280.50, above the most widely followed fair value estimate of SEK265.07, so the current price sits ahead of that narrative.

The analysts have a consensus price target of SEK265.07 for Essity based on their expectations of its future earnings growth, profit margins and other risk factors.

However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK300.0 and the most bearish reporting a price target of just SEK215.0.

Read the complete narrative.

Want to see what earnings path and margin profile underpin that fair value for Essity? The narrative is based on measured revenue growth, firmer profitability and a lower future earnings multiple. Curious how those ingredients combine into SEK265.07.

Result: Fair Value of SEK265.07 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this Essity narrative could be challenged if volume growth stays weak in key categories or if higher SG&A and input costs continue to squeeze margins.

Find out about the key risks to this Essity narrative.

Another View on Essity’s Valuation

While the analyst narrative frames Essity as about 5.8% overvalued versus a SEK265.07 fair value, the current P/E of 15.7x tells a different story. It sits below both the Global Household Products industry at 16.9x and peers at 22.3x, and below a fair ratio of 28.6x. This points to a wide valuation gap that investors need to interpret as either cushioning risk or hinting at something the market is concerned about.

If you want to see how those P/E gaps translate into risks and potential upside in hard numbers, take a closer look at the valuation breakdown, including the fair ratio and peer comparisons, in the See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With sentiment on Essity pulled between solid share price gains and questions about valuation, it is worth checking the underlying data yourself and moving quickly. To see which specific strengths analysts are optimistic about, review the 3 key rewards

Looking for more investment ideas beyond Essity?

If Essity has sharpened your focus on valuation and quality, do not stop here. Use the screener to spot other opportunities that fit your style.

• Target long term growth potential by scanning companies flagged as 234 high quality undervalued stocks that line up strong fundamentals with what you are willing to pay.
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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.

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