Axfood (OM:AXFO) Stock Margins Improve To 2.7% Net Profit Challenging Bearish Narratives

Axfood (OM:AXFO) has reported solid Q2 2026 numbers, with revenue of about SEK23.2b and basic EPS of 2.94 SEK, supported by trailing twelve month EPS of 11.27 SEK on revenue of roughly SEK89.9b and net income of SEK2.43b. Over recent quarters the company has seen revenue move from roughly SEK22.3b in Q3 2025 to SEK21.6b in Q1 2026 and then to SEK23.2b in Q2 2026, while quarterly EPS has ranged between 2.09 SEK and 3.30 SEK. This gives investors a clearer view of how earnings are tracking against a net profit margin that has edged higher year on year. With earnings growth outpacing revenue growth over the last year and margins ticking up, this set of results highlights a business where profitability is making a notable contribution.

See our full analysis for Axfood.

With the latest numbers in place, the next step is to see how this earnings profile lines up with the dominant Axfood narratives that investors have been using to frame the story so far, and where those stories might be challenged by the recent margin trends.

See what the community is saying about Axfood

Margin progress shows up in 2.7% net profit level

• Over the last 12 months Axfood converted SEK89.9b of revenue into SEK2.43b of net income, which works out to a 2.7% net profit margin compared with 2.4% a year earlier.
• Bears focus on pressure points like loss making City Gross and lower margin online growth, yet the higher group margin and SEK11.27 of trailing EPS indicate that, so far, cost inflation and pricing pressure have not erased profitability at the group level.
  • The bearish narrative highlights risks from food price deflation and the VAT cut on food to 6%, but the 2.7% margin shows Axfood is still keeping more of each krona of sales than a year ago.
  • Concerns about City Gross weighing on results are real, yet SEK634m of Q2 2026 net income and SEK2.43b over the last year show that current losses there are being absorbed within a profitable group.

For a deeper breakdown of how bulls think Axfood can build on this margin base over time, see 🐂 Axfood Bull Case.

14.8% earnings growth versus 3.4% revenue trend

• Across the last 12 months Axfood grew earnings by 14.8% while revenue growth is forecast at about 3.4% per year, which means recent profit growth has run ahead of the top line.
• Consensus narrative points to automation and logistics investment as key earnings drivers, and the combination of SEK89.9b of trailing revenue, SEK2.43b of net income and an 11.27 SEK trailing EPS gives concrete evidence that higher efficiency is already feeding into the income statement.
  • Analysts expect earnings to reach SEK3.0b and EPS of SEK13.95 by around 2029, and the step up from today’s SEK2.43b and 11.27 SEK EPS sets a measurable starting point for that view.
  • At the same time, forecast revenue growth of around 3.4% a year is only modestly higher than the recent trend, so the consensus case leans heavily on margins moving from 2.7% to 3.1% rather than a surge in sales.

P/E of 20.3x and big gap to DCF fair value

• Axfood trades on a trailing P/E of 20.3x at a share price of SEK228.5, compared with peers at 23.3x, the wider European consumer retail group at 18x and a DCF fair value estimate of SEK467.29.
• Critics highlight that a 20.3x P/E is still above the broader industry, yet the combination of 14.8% earnings growth, a 3.94% trailing dividend yield and a price that sits well below a DCF fair value of SEK467.29 creates a valuation picture that is less cautious than the bearish narrative suggests.
  • Even using a capped analyst price target of SEK250.00, the current SEK228.5 share price sits below that level, which contrasts with the idea that the stock is already pricing in overly optimistic assumptions.
  • The bearish cohort’s view that Axfood might trade on about 20.5x earnings in 2029 is close to today’s 20.3x P/E, so the present multiple and the 51.1% gap to DCF fair value show the market is not giving the company much credit for forecast growth yet.

Skeptics who want to see how their concerns stack up against the detailed margin and valuation work can walk through the 🐻 Axfood 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 Axfood on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Given how balanced the Axfood story looks right now, it makes sense to move quickly and test the numbers against your own expectations. To see exactly which potential positives stand out in the current data, review the 4 key rewards.

See What Else Is Out There Beyond Axfood

Axfood currently relies on relatively modest forecast revenue growth and a thin 2.7% net margin, which together leave limited room for error if pricing or costs move against it.

If that tight margin profile makes you want a bit more cushion, check out 294 resilient stocks with low risk scores today and compare Axfood with companies that score better on downside resilience.

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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