Fabege (OM:FABG) Stock Faces Q3 Earnings Strength And P E Doubts

Fabege walked into this Q3 2026 report with the stock under quiet pressure, down about 14% over three months and closing yesterday at SEK63.35. The headline number hits hard. Profit after tax reached SEK1.2b, with profit from property management at SEK1.166b, and the interest coverage ratio improving to 2.7. That is a very different story to what the share price has been telling. Short term sentiment looks tired, while the multi year picture now hinges on how investors price that earnings power against a still stretched P/E.

Love Fabege’s solid profit and improving interest coverage, but concerned that a stretched P/E leaves less room for error? Compare it against our 190 high quality undervalued stocks for ideas that pair earnings power with more modest valuations.

Q3 2026 Earnings Summary

• Revenue (Q3 2026 vs. Q3 2025): SEK 1,285m vs. SEK 852m (up 51%)
• Net Income (Excl. Extra Items, Q3 2026 vs. Q3 2025): SEK 700m vs. SEK 99m (very large increase, around 7x)
• Basic EPS (Q3 2026 vs. Q3 2025): 2.23 SEK vs. 0.31 SEK (very large increase)
• Net Margin (Trailing 12 Months vs. Prior Year): 23.5% vs. 8.2% (profitability meaningfully higher on a trailing basis)

Ask Charlie what Fabege promised on vacancy cuts this time.

Evaluating Fabege’s Profitability Upside Against Q3 Reality

The bullish storyline rests on Fabege turning its Stockholm focus and efficiency push into much higher profitability over time.

"Advanced digitalization initiatives, such as the collaboration with Myrspoven for AI-driven energy optimization, could reduce operating expenses at a scale not yet priced into forecasts and further differentiate Fabege's portfolio, ultimately supporting a significant improvement in net margins."

Q3 gives this idea some grounding. Profit from property management reached SEK1.166b, with profit after tax at SEK1.2b and interest coverage at 2.7. That combination signals healthier recurring earnings and more comfortable financing costs. Occupancy at 87% and year to date net lettings still slightly negative indicate that the margin story is progressing, but not yet backed by broad based rental momentum.

That disagreement has a full argument behind it. → Uncover the higher Fair Value this Narrative argues for.

Fabege Vacancy Fears Meet Mixed Operating Evidence

Bearish investors worry that weak leasing in Solna Business Park will harden into a structurally lower occupancy base for Fabege.

"Intensifying structural vacancies in Solna Business Park and selected submarkets, combined with only modest leasing momentum, risk locking a materially lower occupancy rate into the base for several years. This may cap rental income growth and slow any recovery in earnings."

Q3 shows an uneasy middle ground. Occupancy is stuck at 87%, which supports the concern that vacancy reduction is slow. At the same time, rental income is higher year on year, net lettings in the quarter are positive and valuation changes are slightly positive. As a result, the cash flow and asset values do not yet reflect a severe vacancy shock.

Hunt For Quiet Mispricings

Fabege illustrates how earnings strength and share price pressure can move in different directions for a time. The real opportunity sits in finding stocks that could be undervalued before the market closes the gap.

• Company 1 - 46% below our estimate - uses data and AI to control underwriting and claims costs while reshaping motor and Nordic portfolios.
• Company 2 - 42% below our estimate - scales mortgage, housing and insurance platforms as smaller units move from breakeven toward stated profit targets.
• Company 3 - 41% below our estimate - expands animal health formulations into new markets while shifting mature human products to lower cost manufacturing and deeper backward integration.

That is three of the list. See all 190 potentially undervalued companies →

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