Translation: Original published in Finnish on 11/2/2026 at 7:30 am EET.

We reiterate our EUR 16.00 target price and Accumulate recommendation for Raute. Order intake, the focus of Raute’s Q3 report, met expectations, and the 4 MEUR cost-savings program the company has launched further increases confidence in the earnings turnaround we forecast for next year. Given the still considerable uncertainties, we make no changes to our estimates for the next few years. We still see Raute’s expected return, comprising valuation upside and dividends, as exceeding our required return. Our extensive report on Raute, published in October, can be read here.

The numbers were roughly in line with expectations

In terms of figures, Raute’s Q3 report was largely in line with expectations. Profitability was strong, especially given the low revenue of 29 MEUR (Q3 adj. EBITDA margin: 11%), as good operational performance and the ongoing release of project provisions supported the margin. As expected, new orders rose clearly to 53 MEUR, returning the order book to quarter-on-quarter growth at a reasonable 85 MEUR. According to management, demand remains difficult to predict, although discussions have become more active, especially on smaller modernization and efficiency projects.

No major estimate revisions for now

Alongside the report, Raute narrowed its guidance and now expects 2026 revenue of 125–135 MEUR (was 125–145 MEUR) and comparable EBITDA of 13–16 MEUR (was 11–18 MEUR). According to the company, the changes reflect the nine-month actuals, the order book at the end of Q3, and the current demand outlook. Raute’s market situation continues to be characterized by customer caution and slow decision-making across all business areas. The root cause is, in particular, weak momentum in global construction, which in turn stems from consumer caution and, in North America, the high cost of new construction. The factors behind the prolonged weak demand are therefore macroeconomic and geopolitical, whereas we consider the company’s competitive advantage and market position strong. To adapt to the uncertainties, Raute has also launched a profitability and competitiveness program targeting 4 MEUR in savings, which we consider necessary given the situation.

We make no material changes to our estimates following the report, but the profitability program, which was in line with our expectations, naturally increases our confidence in the earnings turnaround we forecast for 2027–2028. We now expect Raute’s revenue to fall by 27% this year to 128 MEUR and adjusted EBITDA by 43% to 14.8 MEUR. In the coming years, we expect moderate improvement from this year’s levels, as the recovery in construction begins to support first the company’s service orders and gradually also project demand. Higher revenue would quickly be reflected in Raute’s profitability, especially in Services and Analyzers. The savings may also slightly boost operating leverage. Our growth forecasts for the coming years are clearly below the company’s 2028 revenue target of 250 MEUR. Our profitability forecasts, by contrast, are already close to the company’s target of an adjusted EBITDA margin above 12%, driven by recent encouraging developments and ongoing internal development measures.

Valuation low unless earnings decline further next year

On our forecasts, Raute’s adjusted P/E for 2026–2027 is about 11x and 10x, with EV/EBIT of 7x and 5x respectively. Even the current-year multiples are around the lower end of the ranges we consider acceptable for Raute. In our view, the share is pricing in a declining and/or unduly weak long-term earnings level. On a one-year horizon, the expected return, comprising valuation upside and a dividend yield of just under 5%, exceeds our required return. Our DCF model also indicates that the share is cheap.