WEBULL
WebtradeDownload

Is Embracer Group (OM:EMBRAC B) Undervalued Following Strong Earnings And Guidance?

Simply Wall St · 3d ago

Why Embracer Group’s latest earnings and guidance matter for investors

Embracer Group (OM:EMBRAC B) has drawn fresh attention after reporting first quarter 2026 results alongside new earnings guidance for the second quarter and full fiscal year 2026 to 2027.

The company reported first quarter revenue of SEK 4,006 million compared with SEK 3,261 million a year earlier, and net income of SEK 39 million compared with a net loss of SEK 411 million in the prior year period.

At the same time, Embracer Group issued guidance that points to year on year Cash EBIT improvement in the second quarter, following a similar pattern to the first quarter, and projected full year Cash EBIT of at least SEK 1.0b.

Embracer Group’s recent guidance and turnaround to a profit appear to have supported momentum, with the share price at SEK74.32, a 30-day share price return of 15.48%, and a year-to-date share price return of 27.35%, while the 5-year total shareholder return remains down 66.19%.

Spot 608 high quality undiscovered gems that, like Embracer Group, are starting to turn recent earnings momentum into stronger sentiment from the market.

Embracer Group is starting to look more like a functioning business again, and the share price has moved with that story. The next step is to evaluate whether that improving narrative is already fully reflected in the current share price.

Most Popular Narrative: 4.6% Undervalued

At a last close of SEK74.32 against a narrative fair value of SEK77.90, Embracer Group is framed as modestly undervalued, with that view built on a detailed story about restructuring, core IP and capital returns.

The upcoming Coffee Stain spin off and capital allocation discipline are expected to unlock shareholder value, while Embracer's strong net cash position provides flexibility for both organic investment and capital returns, with management explicitly stating intent to distribute excess cash post spin, potentially lifting future EPS.

Read the complete narrative.

Want to see what turns this restructuring story into that valuation gap? The narrative leans heavily on improving margins, steadier revenue growth and a future profit multiple that is not excessive by industry standards. The crucial piece is how these assumptions combine over several years to back into SEK77.90 as fair value, rather than just today’s earnings picture.

Result: Fair Value of SEK77.90 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Embracer Group’s story can still be knocked off course if future game releases underperform or if the ongoing restructuring results in more revenue volatility.

Find out about the key risks to this Embracer Group narrative.

Next Steps

With sentiment around Embracer Group turning more constructive, it can be helpful to move quickly and test the story against your own expectations and risk tolerance. To see what the market currently views as the main upside factors, review the 3 key rewards

Looking for more Embracer Group style investment ideas?

If Embracer Group has sharpened your interest, do not stop here. Use focused stock lists to spot other opportunities before they move out of reach.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.