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1. Company Snapshot

1.a. Company Description

AB SKF (publ) engages in the design, development, and manufacture of bearings, seals, lubrication systems, and services worldwide.It operates in two segments, Industrial and Automotive.The company offers rolling bearings, mounted bearings and housings, super-precision bearings, slewing bearings, plain bearings, magnetic bearings and systems, industrial and automotive seals, lubrication management solutions, maintenance products, condition monitoring systems, power transmission solutions, test and measuring equipment, vehicle aftermarket, and waste electric and electronic equipment products.


It also provides various services, including application engineering, asset management, condition-based maintenance, mechanical maintenance, remanufacturing and customization, and training solutions.The company offers its solutions for various industries, including aerospace, agriculture, cars and light trucks, construction, food and beverage, general machinery, machine tools, marine, material handling, metals, mining, mineral processing and cement, ocean energy, oil and gas, pulp and paper, railways, trucks, trailers, buses, two and three wheelers, and wind energy.AB SKF (publ) was founded in 1907 and is headquartered in Gothenburg, Sweden.

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1.b. Last Insights on SKF

AB SKF's recent performance has been impacted by the divestment of its non-core aerospace operation in Elgin, USA, as part of its strategic focus on core aerospace areas. This move, completed on January 30, 2026, aims to exit non-core business lines. Additionally, the company's performance may be influenced by a weakening labor market, as indicated by the upcoming US jobs report. Despite a strengthening eurozone economy, investors are focusing on dividend stocks for stability, which may not directly benefit AB SKF.

1.c. Company Highlights

2. SKF's Resilience in Challenging Market Conditions

SKF reported net sales of SEK 92 billion for the full year 2025, representing a flat organic growth, with Industrial growing 1% and Automotive at a negative 4%. The adjusted operating margin improved to 12.7% despite challenging market conditions. The company's earnings per share (EPS) came out at 1.25, below analyst estimates of 4.9. Net cash flow from operations was SEK 8.4 billion. In Q4, net sales were SEK 22 billion, with flat year-over-year organic growth, and an adjusted operating margin of 11.8%. The improvement was driven by cost management, price/mix activities, and the rightsizing program, which contributed SEK 200 million.

Publication Date: Feb -15

📋 Highlights
  • Improved Adjusted Operating Margin:: Full-year 2025 adjusted operating margin rose to 12.7%, driven by cost management, price/mix activities, and rightsizing program contributions of SEK 200 million.
  • Automotive Separation Timeline:: The Automotive business is set to be listed in Q4 2026, with accelerated phaseout of contract manufacturing and anticipated SEK 2.5–3 billion in one-off costs for separation.
  • Cost Savings Progress:: Rightsizing program achieved SEK 1.25 billion in savings in 2026/2027, with annual benefits reaching SEK 2 billion by 2027, offsetting dissynergies and contract manufacturing.
  • FX Impact Guidance:: Q1 2026 earnings face a SEK 800 million negative impact due to dollar weakness against the krona and lira, despite stable tax rate guidance at 28%.
  • Capital Structure Strength:: Net debt/EBITDA reduced to 0.5, with CapEx at SEK 5 billion (5% of sales for Industrial), and maintained dividend of SEK 7.75 per share in two tranches.

Operational Highlights

The company's Industrial segment grew 1% organically, while Automotive declined 4%. The rightsizing program is on track, with a positive impact of SEK 190 million from savings in Q4. The company expects to achieve SEK 2 billion in run-rate savings by 2027, with a linear progression over the next two years. The separation of the Automotive business is on track for Q4 2026, with no impact from external parties.

Outlook and Guidance

For the outlook, market demand in Q1 is expected to remain at a similar level as Q4. Organic sales are anticipated to strengthen somewhat in Q1 year-over-year, supported by more favorable comparisons. The guidance for Q1 with respect to FX anticipates a further negative impact of earnings sequentially, driven by a continued weakness of the dollar against the Swedish krona and mainly the Turkish lira, estimating the impact to be minus SEK 800 million year-over-year for Q1.

Valuation Metrics

With a P/E Ratio of 29.45 and an EV/EBITDA of 9.82, the market seems to be pricing in a certain level of growth. The Dividend Yield is 3.05%, which is attractive for income investors. The ROE is 7.22%, indicating a relatively stable return on equity. Analysts estimate next year's revenue growth at 3.8%, which may not be sufficient to justify the current valuation.

Strategic Pillars

The company is navigating a challenging environment, maintaining resilience and an improved adjusted operating margin. They foresee an uptick in demand and are preparing to leverage growth. The organization is gearing up to deliver on strategic pillars that will unlock the full potential of their business. The rightsizing program will deliver an annual benefit of SEK 2 billion, which will offset dissynergies and contract manufacturing.

3. NewsRoom

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SKF completes previously announced divestment of non-core aerospace operation in Elgin, USA

Jan -30

Source:

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European Dividend Stocks To Enhance Your Portfolio

Jan -16

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Is Pioneer Power Solutions (PPSI) Outperforming Other Industrial Products Stocks This Year?

Dec -31

Source: zacks.com

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Finally! U.S. Federal Jobs Data - Global Week Ahead

Dec -15

Source: zacks.com

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Are Industrial Products Stocks Lagging Atlas Copco (ATLKY) This Year?

Nov -14

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Top 3 European Dividend Stocks To Consider

Nov -06

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SKF AB (SKFRY) Q3 2025 Earnings Call Highlights: Navigating Growth Amidst Challenges

Nov -05

Source:

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SKF launches The Patent Bay - a platform for sharing technologies that could reduce environmental impact

Nov -04

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.21%)

6. Segments

Industrial

Expected Growth: 3.5%

SKF's 3.5% growth in the Industrial segment is driven by increasing demand for energy-efficient solutions, growth in renewable energy, and expansion in the aerospace and defense industries. Additionally, the company's focus on digitalization, electrification, and innovation in bearings and seals contributes to its growth momentum.

Automotive

Expected Growth: 2.5%

AB SKF's 2.5% growth in Automotive segment is driven by increasing demand for electric vehicles, rising adoption of advanced driver-assistance systems, and growing need for energy-efficient solutions. Additionally, the company's focus on innovation, cost savings, and strategic partnerships contribute to its growth momentum.

7. Detailed Products

Bearings

SKF offers a wide range of bearings, including ball bearings, roller bearings, and plain bearings, designed to reduce friction and wear in various industrial applications.

Seals

SKF provides a variety of seals, including radial shaft seals, axial clamp seals, and cassette seals, designed to prevent leakage and contamination in industrial applications.

Measuring and Lubrication Systems

SKF offers a range of measuring and lubrication systems, including condition monitoring systems, lubrication systems, and hydraulic systems, designed to optimize equipment performance and reduce downtime.

Couplings

SKF provides a variety of couplings, including flexible couplings, rigid couplings, and elastomeric couplings, designed to transmit power and accommodate misalignment in industrial applications.

Linear Motion

SKF offers a range of linear motion products, including linear bearings, linear guides, and linear actuators, designed to provide precise and smooth motion in industrial applications.

Actuation Systems

SKF provides a range of actuation systems, including electric actuators, hydraulic actuators, and pneumatic actuators, designed to provide precise and reliable motion control in industrial applications.

8. AB SKF (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for AB SKF (publ) is medium due to the presence of alternative products and services in the market, but the company's strong brand reputation and quality products mitigate this threat to some extent.

Bargaining Power Of Customers

The bargaining power of customers is low for AB SKF (publ) as the company operates in a niche market with a strong brand presence, making it difficult for customers to negotiate prices or demand customized products.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium for AB SKF (publ) as the company relies on a few key suppliers for raw materials, but it has a diversified supply chain and strong relationships with suppliers to mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low for AB SKF (publ) due to the high barriers to entry in the bearing manufacturing industry, including significant capital investments and technological expertise required to compete with established players.

Intensity Of Rivalry

The intensity of rivalry is high in the bearing manufacturing industry, with several established players competing for market share, but AB SKF (publ) has a strong market position and competitive advantages to maintain its market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 26.98%
Debt Cost 6.74%
Equity Weight 73.02%
Equity Cost 9.05%
WACC 8.42%
Leverage 36.95%

11. Quality Control: AB SKF (publ) passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Logista

A-Score: 6.9/10

Value: 7.0

Growth: 4.8

Quality: 5.6

Yield: 10.0

Momentum: 4.0

Volatility: 10.0

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Strabag

A-Score: 6.6/10

Value: 7.5

Growth: 4.7

Quality: 6.5

Yield: 8.1

Momentum: 10.0

Volatility: 3.0

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Wallenius Wilhelmsen

A-Score: 6.0/10

Value: 10.0

Growth: 8.2

Quality: 6.7

Yield: 6.2

Momentum: 2.5

Volatility: 2.3

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SKF

A-Score: 5.7/10

Value: 4.3

Growth: 4.6

Quality: 5.2

Yield: 6.9

Momentum: 6.0

Volatility: 7.3

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DMG MORI

A-Score: 5.6/10

Value: 3.2

Growth: 2.4

Quality: 6.9

Yield: 3.8

Momentum: 7.5

Volatility: 10.0

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SFS

A-Score: 5.1/10

Value: 4.6

Growth: 5.4

Quality: 6.5

Yield: 3.8

Momentum: 1.0

Volatility: 9.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

243.0$

Current Price

243$

Potential

-0.00%

Expected Cash-Flows