Vaisala - Growth and margin expansion
Vaisala’s Q4’25 figures and FY’26 guidance came in largely as expected. We believe continued IM growth will lift its EBITA more this year thanks to operating leverage, while W&E could start to see growth again towards next year. Vaisala’s EBITA would then be positioned to grow 10% more.
IM drives growth while W&E demand is stabilizing
Vaisala’s Q4 main figures were largely as expected as the EUR 162m revenue and EUR 26m EBITA didn’t differ much from estimates. The EBITA margin of W&E was still a decent 14.7% thanks to recent cost savings measures, topping our estimate, while higher-than-expected IM OPEX left its EBITA soft relative to our estimate. W&E demand outlook now seems to be stabilizing, but it’s still hard to see growth for the segment in FY’26. IM’s recent order trends suggest it could grow at a double-digit rate this year, and we expect Vaisala to reach the higher end of its revenue guidance range.
Revenue to grow about 6% and EBITA some 10%
In our view W&E FY’26 EBITA should remain close to EUR 40m, while the growth of IM should take its EBITA to at least some EUR 55m; we estimate the figure at EUR 65m so that Vaisala’s FY’26 EBITA would gain by almost EUR 10m y/y to EUR 103m, or near the guidance midpoint. IM’s outlook now seems strong enough, driven by many bigger demand trends such as data centers, that it’s reasonable to expect growth to continue at least at a high single-digit rate next year. Meanwhile W&E may not grow in FY’26, but its orders are mostly stabilizing and it could yet book e.g. the EUR 25m Indonesian airport modernization project.
Multiples are quite attractive relative to peers’
We expect IM to grow 12% in FY’26, while we expect W&E to remain flat. IM might not grow at such a high rate for very long, but the improving outlook within W&E could help Vaisala to maintain around 6% growth next year; we would then expect operating margins to improve by another 100bps, which implies an earnings growth of roughly 10%. Vaisala is valued some 16x EV/EBIT on our FY’26 estimates, and we estimate earnings growth to take the multiple down to 13x next year. These multiples are 25% below peers’, yet Vaisala’s growth and earnings profile doesn’t differ that much from the typical peer. We retain our EUR 50.0 TP and BUY rating.