Inderes has reiterated its "increase" recommendation for Finnish retail and wholesale chain Kesko, following a third quarter in which sales outperformed expectations. Analysts anticipate Kesko's earnings to regain momentum in the final quarter of the year and to continue growing in the coming years, mainly driven by improved margins in the building and technical trade segments. However, the target price has been lowered to EUR20.5 from the previous EUR21.5, reflecting slightly reduced estimates.
The research firm cut its earnings estimates for 2026 by 3-5 percent in its latest update, primarily due to a lower margin forecast for the grocery trade division.
Based on the 2025 forecast, Kesko is valued at approximately 17 times price-to-earnings (P/E) and 16 times enterprise value to earnings before interest and taxes (EV/EBIT), levels that reflect earnings constrained by a weak market. Inderes believes that a longer-term perspective offers a fairer view of the company's potential, as 2027 earnings correspond to multiples of just over 13 times, which is considered attractive given the company's quality profile. A dividend yield of around 5 percent and an estimated total return potential of approximately 15 percent lead analysts to view the stock as having a favorable risk/reward profile. The discounted cash flow (DCF) value is estimated at about EUR21 per share.
