Neste Oyj (NESTE.HE) | Investment Case

1. Company Snapshot

1.a. Company Description

Neste Oyj provides renewable and oil products in Finland and other Nordic countries, Baltic Rim, other European countries, North and South America, and internationally.The company operates in four segments: Renewable Products, Oil Products, Marketing & Services, and Others.The Renewable Products segment produces, markets, and sells renewable diesel, renewable jet fuels and solutions, and renewable solvents, as well as raw material for bioplastics based on its technology to wholesale markets.

The Oil Products segment produces, markets, and sells diesel fuel, gasoline, aviation and marine fuels, light and heavy fuel oils, base oils, gasoline components, small engine gasoline, solvents, liquid gases, and bitumen.This segment serves retailers and distributors, oil majors and trading companies, petrochemicals companies, and companies marketing lubricants and solvents.The Marketing & Services segment markets and sells petroleum products and associated services to private motorists, industry, transport companies, farmers, and heating oil customers through a network of 947 service stations, as well as direct sales.

The Others segment offers engineering and technology solutions.The company also manufactures raw materials for polymers and chemicals materials.The company was formerly known as Neste Oil Oyj and changed its name to Neste Oyj in June 2015.

Neste Oyj was founded in 1948 and is headquartered in Espoo, Finland.

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1.b. Last Insights on NESTE

Neste Oyj's recent performance was positively driven by favorable business conditions, with a notable development being Mahoney Environmental's achievement of dual ISCC certifications. This expansion of feedstock options for clean fuels enhances Neste's capabilities in the sustainable energy sector. Furthermore, Mahoney Environmental's 73rd anniversary milestone underscores its long-standing expertise in serving the food service industry. These developments suggest a promising outlook for Neste's growth and diversification efforts.

1.c. Company Highlights

Last Price	21.19
Change Percentage	-0.47%
Open	21.36
Previous Close	21.29
Market Cap ( Millions)	16280
Volume	50726
Year High	22.03
Year Low	6.79
M A 50	20.13
M A 200	15.98

FCF Yield	5.07%
Dividend Yield	3.78%
ROE	1.99%
Debt / Equity	80.98%
Net Debt / EBIDTA	416.45%
Price To Book	2.23
Price Earnings Ratio	113.05
Price To FCF	19.73
Price To sales	0.86
EV / EBITDA	19.05

2. Neste's Q4 2025 Earnings: A Strong Financial Turnaround

Neste reported a significant improvement in its financial performance for 2025, with a comparable EBITDA of EUR 1.683 billion, representing a EUR 400 million increase from the previous year. In Q4, EBITDA was EUR 601 million, driven by a strong finish across all businesses. The company's EPS came in at EUR 0.1484, missing estimates of EUR 0.19. Revenue growth is expected to continue, with analysts estimating a 14.4% increase for the next year. The company's valuation metrics indicate a P/E Ratio of 110.7, P/B Ratio of 2.18, and EV/EBITDA of 18.74, suggesting that the market has already priced in some of the growth expectations.

Publication Date: Feb -15

                                    📋 Highlights
                                    EBITDA Surplus Achieved:
                                                Neste reported a comparable EBITDA of EUR 1.683 billion in 2025, a EUR 400 million increase from the prior year, with Q4 EBITDA at EUR 601 million.
Performance Improvement Program Exceeds Target:
                                                The program delivered EUR 376 million in savings, surpassing initial goals and contributing to 75% of cost reductions and 25% of margin/volume optimization.
Renewable Diesel Growth Tailwinds:
                                                Regulatory support in Europe, the US, and Asia is projected to boost renewable diesel demand to over 10 million tons by 2030, driven by Renewable Energy Directive III implementation.
Capital Expenditure Guidance:
                                                2026 CapEx estimated between EUR 1–1.2 billion, including the Porvoo refinery turnaround, with Rotterdam expansion on track for 2027 start-up.
Utilization & Margin Focus:
                                                Current utilization at ~75%, with plans to improve closer to full capacity; renewable diesel margins exceeded $900/ton in H2 2025, supported by high refining margins and term contracts at 60% for 2026.

                                

Segment Performance

The Renewable Products segment saw sales volumes increase to 1.1 million tons in Q4, with a comparable EBITDA close to Q3 levels. Oil Products benefited from high utilization and a refining margin of over $20, supporting profitability. Marketing & Services also reported a sales volume increase in Finland and Estonia. The performance improvement program delivered EUR 376 million, exceeding the target, and is expected to continue into 2026.

Regulatory Environment and Outlook

Neste sees supportive regulatory tailwinds in Europe, the US, and Asia, with increasing mandates and opportunities for renewable diesel and sustainable aviation fuel. The implementation of the Renewable Energy Directive III in Europe is expected to drive growth in renewable diesel volumes. The company is focused on maximizing asset utilization and continuing the performance improvement program. For 2026, renewable product sales volumes are expected to be approximately at the same level as in 2025, while Oil Products' sales volumes are expected to be lower due to the Porvoo refinery turnaround.

Capital Expenditure and Dividend

Neste guided cash out investments to be between EUR 1 billion and EUR 1.2 billion, with a Porvoo refinery turnaround adding to CapEx. The Board recommended a dividend of EUR 0.20, the same level as last year. The company's leverage is below 40%, and deleveraging is a priority, with a focus on reducing gross debt and building a stronger balance sheet.

Management Insights

According to Heikki Malinen, "Neste is running close to capacity, with debottlenecking opportunities arising during turnarounds." Eeva Sipila added that sales market prices and feedstock prices are crucial for profitability, with a focus on finding the right feedstock and maximizing margins. The company's management is optimistic about its performance in 2026, driven by healthy diesel prices and improving production utilization rates.

3. NewsRoom

Mahoney Environmental Celebrates 73 Years of Service to the Food Service Industry

Feb -20

Source: prnewswire.com

Mahoney Environmental Achieves Dual ISCC Certifications, Expanding Feedstock Options for Clean Fuels

Jan -19

Source: prnewswire.com

European Stocks Priced Below Estimated Value In October 2025

Oct -06

Source:

European Equity Picks That Might Be Trading Below Fair Value In September 2025

Sep -04

Source:

Europe HVO for Data Center Backup Market Report 2025-2034, with Profiles of Neste, Repsol, TotalEnergies, Eni, Crown Oil, Certas Energy, LubiQ HVO Fuels, Rolls-Royce, and Moteurs Baudouin

Sep -01

Source:

Asia-Pacific HVO for Data Center Backup Market Analysis and Forecast 2025-2034 | Hydrotreated Vegetable Oil Expands as a Key Backup Fuel in Asia-Pacific's Digital Transformation

Aug -25

Source:

3 European Stocks Estimated To Be Trading Up To 49.2% Below Intrinsic Value

Aug -06

Source:

HVO (Hydrotreated Vegetable Oil) for Data Center Backup Market Analysis Report 2025: Neste, Rapsol, TotalEnergies, Phillips 66, and ENI Lead the Highly Competitive $38 Million Market

Jul -15

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (14.98%)

6. Segments

Oil Products

Expected Growth: 14%

Neste Oyj's 14% growth in Oil Products is driven by increasing demand for low-carbon renewable fuels, strategic expansion into new markets, and continuous improvement in operational efficiency. Additionally, the company's focus on sustainable aviation fuels and renewable diesel production contributes to its growth momentum.

Renewable Products

Expected Growth: 18%

Neste Oyj's 18% growth in Renewable Products is driven by increasing demand for low-carbon fuels, government incentives for renewable energy, and strategic partnerships to expand production capacity. Additionally, growing adoption of sustainable aviation fuels and rising sales of renewable diesel contribute to the segment's growth.

Marketing & Services

Expected Growth: 12%

Neste Oyj's Marketing & Services segment growth of 12% is driven by increasing demand for low-carbon renewable fuels, expansion of its retail network, and strategic partnerships. Additionally, the company's focus on digitalization and e-mobility solutions, as well as its strong brand recognition, contribute to its growth momentum.

Others

Expected Growth: 10%

Neste Oyj's growth is driven by increasing demand for renewable energy, government incentives for sustainable fuels, and strategic expansion into new markets. Additionally, the company's focus on research and development, particularly in renewable diesel and aviation fuels, has enabled it to stay ahead of the competition and capitalize on emerging opportunities.

7. Detailed Products

Renewable Diesel

Neste's renewable diesel is a low-carbon, high-quality diesel fuel made from 100% renewable raw materials, such as waste and residues.

Sustainable Aviation Fuel

Neste's sustainable aviation fuel is a low-carbon, high-quality fuel made from 100% renewable raw materials, such as waste and residues.

Renewable Naphtha

Neste's renewable naphtha is a low-carbon, high-quality feedstock made from 100% renewable raw materials, such as waste and residues.

Biodiesel

Neste's biodiesel is a low-carbon, high-quality diesel fuel made from renewable raw materials, such as vegetable oils and waste fats.

Base Oils

Neste's base oils are high-quality lubricant base oils made from fossil and renewable raw materials.

Gasoline

Neste's gasoline is a high-quality fuel made from fossil raw materials.

Heating Oils

Neste's heating oils are high-quality fuels made from fossil raw materials.

8. Neste Oyj's Porter Forces

Forces Ranking

Threat Of Substitutes

Neste Oyj's renewable energy products are highly specialized, making substitutes less likely. However, the increasing adoption of electric vehicles and alternative energy sources poses a moderate threat.

Bargaining Power Of Customers

Neste Oyj's customers are largely industrial and commercial entities, which have limited bargaining power due to their dependence on Neste's specialized products.

Bargaining Power Of Suppliers

Neste Oyj relies on a diverse range of suppliers for its raw materials, which reduces the bargaining power of individual suppliers. However, the company's dependence on certain critical suppliers poses a moderate risk.

Threat Of New Entrants

The renewable energy industry has high barriers to entry, including significant capital requirements and regulatory hurdles, making it difficult for new entrants to challenge Neste Oyj's market position.

Intensity Of Rivalry

The renewable energy industry is highly competitive, with several established players competing for market share. Neste Oyj faces intense rivalry from companies such as Total, Shell, and ExxonMobil.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	28.05%
Debt Cost	3.95%
Equity Weight	71.95%
Equity Cost	8.35%
WACC	7.12%
Leverage	38.99%

11. Quality Control: Neste Oyj passed 6 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Rubis

A-Score: 7.2/10

Value: 7.7

Growth: 5.6

Quality: 4.9

Yield: 8.8

Momentum: 8.5

Volatility: 7.7

1-Year Total Return ->

Subsea 7

A-Score: 6.4/10

Value: 6.9

Growth: 6.9

Quality: 5.1

Yield: 6.2

Momentum: 6.0

Volatility: 7.0

1-Year Total Return ->

DCC

A-Score: 5.1/10

Value: 7.0

Growth: 3.8

Quality: 2.4

Yield: 6.2

Momentum: 2.0

Volatility: 9.0

1-Year Total Return ->

IRPC

A-Score: 5.0/10

Value: 8.2

Growth: 4.4

Quality: 3.5

Yield: 3.3

Momentum: 3.5

Volatility: 7.3

1-Year Total Return ->

Esso

A-Score: 4.4/10

Value: 8.7

Growth: 5.2

Quality: 2.0

Yield: 5.6

Momentum: 5.0

Volatility: 0.0

1-Year Total Return ->

Neste

A-Score: 4.0/10

Value: 4.8

Growth: 3.2

Quality: 1.5

Yield: 5.6

Momentum: 7.0

Volatility: 2.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

3.53%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.12%

Neste Oyj - FI0009013296

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on NESTE

1.c. Company Highlights

Weak Momentum

Fairly Valued

Average Growth

Earnings Miss

Revenues Miss

Revenues Beats

Average Quality

Expensive

Average Yield

Lower Quality

Medium Volatility

Earnings Beats

2. Neste's Q4 2025 Earnings: A Strong Financial Turnaround

Segment Performance

Regulatory Environment and Outlook

Capital Expenditure and Dividend

Management Insights

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (14.98%)

6. Segments

Oil Products

Expected Growth: 14%

Renewable Products

Expected Growth: 18%

Marketing & Services

Expected Growth: 12%

Others

Expected Growth: 10%

7. Detailed Products

Renewable Diesel

Sustainable Aviation Fuel

Renewable Naphtha

Biodiesel

Base Oils

Gasoline

Heating Oils

8. Neste Oyj's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Neste Oyj passed 6 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

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

21.19$

Current Price

21.19$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA