Translation: Original published in Finnish on 5/5/2026 at 7:10 am EEST.

Tokmanni will report its Q1 results on Friday at 8:00 am EEST.  We expect the group's earnings development to have been supported by domestic growth and cost efficiency, while we estimate that the Dollarstore segment continued to struggle with the hurdles brought by the concept change. Tokmanni will likely reiterate its guidance for an improved result at this stage of the year. In addition to the figures, key themes in the report will include Dollarstore's progress in turning around its earnings and the impact of the situation in the Middle East on Tokmanni’s business. We reiterate our Reduce recommendation, as the expected return is too narrow. Due to the increased projections, we revise the target price to EUR 7.8 (previously EUR 7.5).

Earnings improvement in the hands of the Finnish operations

For Q1, we expect Tokmanni's revenue to have increased by 6% year-on-year to around 362 MEUR. The consensus forecast expects 360 MEUR in revenue. In Finland, the company's comparison figures were already subdued, and in addition, we believe Tokmanni benefited from the favorable development of its target market. Summing these factors, we believe the Tokmanni segment's Q1 sales increased by 5%. We estimate 9% growth for Dollarstore, driven by new store openings, while anticipating a slight sales decrease from older stores due to concept changes hindering customer traffic.

We expect the group's Q1 adj. EBIT to have increased by 2 MEUR, reaching the consensus estimate of -9 MEUR. Due to seasonality, Q1 earnings are systematically negative. The earnings improvement we estimate comes purely from the Tokmanni segment, where we anticipate that the company's cost control remained effective, similar to H2'25. We expect Dollarstore's result to have remained at the level of the comparison period, -8 MEUR. We believe the negative comparable store sales trend has weakened the segment's profitability, largely offsetting the slight positive earnings impact from new stores.

We expect guidance to be reiterated

We increased our estimates (~5%) due to strong market development in the beginning of the year. We predict that the company's revenue will grow by 5% to 1,816 MEUR in 2026 (2025: 1,728 MEUR) and adj. EBIT will improve to around 94 MEUR (2025: 85 MEUR). Our earnings estimate is close to the consensus estimate of 93 MEUR. Thus, we expect Tokmanni to reiterate the guidance issued in February, which indicates revenue between 1,780-1,860 MEUR and an adj. EBIT of 85-105 MEUR. Key risks to earnings growth this year include the prolonged transition of the Dollarstore concept and the actual impact of the Middle East conflict on real economic variables.

We believe the risk/reward ratio is too narrow

From a P/E ratio perspective (2026e 11x), Tokmanni appears cheap. Meanwhile, the EV/EBIT multiple (2026e 14x and 12x when adjusted for IFRS 16 items), which considers the balance sheet, is neutral at most or slightly elevated. The discrepancy in the multiples is explained by the elevated net debt and large lease liabilities. We do not expect a significant change in net debt, as the company's free cash flow is used to finance growth, i.e., working capital, and for dividend distribution. For this reason, we believe the P/E ratio should be low in absolute terms. The limited upside of the DCF value (EUR 7.9) also reflects a neutral valuation and that Dollarstore's medium-term earnings turnaround is already priced into the current share price. For those who believe in a rapid turnaround for Dollarstore, the situation could offer a good buying opportunity, but we see the associated risks as elevated, which limits the stock's short-term positive price drivers. This is emphasized by the fact that Dollarstore's turnaround is still ongoing in our view, meaning the decline in comparable store customer numbers will likely continue throughout H1. So far, the evidence suggests a slower turnaround for Dollarstore, meaning we believe that investors can join the story later with a more attractive risk/reward ratio.