Hexagon AB (publ) (HEXA-B.ST) | Investment Case

1. Company Snapshot

1.a. Company Description

Hexagon AB (publ) provides information technology solutions for geospatial and industrial applications worldwide.The company operates through two segments, Industrial Enterprise Solutions (IES) and Geospatial Enterprise Solutions (GIS).The IES segment offers metrology systems that incorporate the in-sensor technology for measurements, as well as computer-aided design, computer-aided manufacturing, and computer-aided engineering software.

Its solutions include coordinate measuring machines, laser trackers and scanners, industrial metrology software, and operations management solutions.This segment's solutions are used in electronics and manufacturing, power and energy, automotive, aerospace and defense, and other industries.The GIS segment provides sensors for capturing data from land and air, as well as for positioning through satellites; and GIS software for the creation of 3D maps and models, which are used for decision-making in various software applications covering areas comprising surveying, construction, public safety, and agriculture.

Its solutions comprise laser scanner, airborne camera, unmanned aerial vehicle, mobile mapping technology, and precise positioning solutions.This segment's solutions are used in surveying, infrastructure and construction, natural resources, public safety, aerospace and defense, and other industries.The company was formerly known as Eken Industri & Handel AB and changed its name to Hexagon AB (publ) in 1993.

Hexagon AB (publ) was incorporated in 1975 and is headquartered in Stockholm, Sweden.

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1.b. Last Insights on HEXA

Hexagon's recent momentum has been hindered by a disconnect between its business performance and valuation. The company's growth prospects have been tempered by a modest uptick in its fair value estimate, from SEK 115.10 to SEK 116.68, as analysts adjust their projections. Additionally, the acquisition of Inertial Sense and IconPro may pose integration challenges, potentially impacting near-term profitability. According to LNS Research, ETQ, a Hexagon subsidiary, has been ranked a 'Front Runner' in the Enterprise Quality Management Software Solution Selection Matrix 2025.

1.c. Company Highlights

Last Price	99.54
Change Percentage	-2.41%
Open	102.7
Previous Close	102
Market Cap ( Millions)	256229
Volume	1318138
Year High	130.55
Year Low	82.8
M A 50	107.22
M A 200	105.56

FCF Yield	4.75%
Dividend Yield	1.57%
ROE	5.99%
Debt / Equity	40.24%
Net Debt / EBIDTA	193.56%
Price To Book	2.48
Price Earnings Ratio	41.02
Price To FCF	21.05
Price To sales	4.46
EV / EBITDA	15.94

2. Hexagon's Q4 2025 Earnings: A Resilient Performance Amidst Currency Headwinds

Hexagon reported a revenue of EUR 1.4 billion in Q4 2025, with a reported growth of minus 1% but an organic growth of 3%. The company's gross margin was a record strong at 67.5%, driven by a favorable product mix and good pricing and cost management. The operating margin was 29.4%, impacted by significant currency headwinds of 150 basis points. The EPS came in at 0.948, significantly higher than the estimated 0.09786.

Publication Date: 08:08

                                    📋 Highlights
                                    Organic Growth & Margin Impact:
                                                Delivered 3% organic growth, with operating margin at 29.4% impacted by 150 bps currency headwinds.
Cash Conversion Strength:
                                                Achieved 121% cash conversion, driven by robust working capital release of EUR 121 million in Q4.
Restructuring Savings:
                                                Implemented a restructuring program yielding EUR 11 million savings in Q4, with annualized EUR 65 million run rate expected by 2026.
Business Area Performance:
                                                Autonomous Solutions grew 23% organically, while Geosystems declined 1% due to China destocking.
Octave EBIT Margin:
                                                Octave reported 32% EBIT margin, influenced by higher perpetual revenue mix in the prior year and FX headwinds.

                                

Segment Performance

The company's business areas performed variably, with Manufacturing Intelligence growing 1%, Geosystems declining by 1% due to proactive destocking in China, and Autonomous Solutions delivering a strong 23% organic growth. Octave, which is being considered for a potential spin-off, reported 2% organic growth, with 3% recurring revenue growth and double-digit SaaS growth.

Financial Highlights

The company's operating earnings decreased by 7% to EUR 420 million, corresponding to a margin of 29.4%. The net working capital release was EUR 121 million in Q4, and the cash conversion was strong at 121%. As Anders Svensson mentioned, "We are targeting growth with profitable markets and areas for us that continue to grow very rapidly." The company's restructuring program is expected to yield EUR 65 million in annualized savings.

Valuation and Outlook

With a P/E Ratio of 41.9 and an EV/EBITDA of 16.24, the market appears to be pricing in a certain level of growth. Analysts estimate next year's revenue growth at 5.8%. The company's guidance for Q1 2026 suggests a continued headwind from currencies and seasonality. However, with a strong order book and a positive growth outlook, Hexagon is well-positioned to drive efficiency and innovation across the group.

Cash Conversion and Margin Evolution

Hexagon's cash conversion is expected to be around 80% to 90% going forward, according to Norbert Hanke. The company's margin evolution in 2026 is expected to be driven by growth in profitable markets and areas, as well as the contribution from new products. With a strong operating model and leadership position in its markets, Hexagon is confident in its ability to deliver strong results in the year ahead.

3. NewsRoom

Is Hexagon’s Profit Drop and Restructuring Drive Altering The Investment Case For Hexagon (OM:HEXA B)?

Jan -31

Source:

Hexagon AB (HXGBF) Q4 2025 Earnings Call Highlights: Strategic Acquisitions and Innovation ...

Jan -30

Source:

ETQ Unveils Reliance AI™, Always Intelligent Quality Management Ecosystem

Jan -27

Source:

Revizto Expands Leadership Team and Launches CIO Advisory Program to Support Rapid Growth

Jan -27

Source:

[Latest] Global Precision Forestry Market Size/Share Worth USD 12.66 Billion by 2034 at a 7.57% CAGR: Custom Market Insights (Analysis, Outlook, Leaders, Report, Trends, Forecast, Segmentation, Growth Rate, Value, SWOT Analysis)

Jan -15

Source:

Enrique Patrickson appointed as new Chief Financial Officer of Hexagon

Jan -13

Source:

Hexagon Robotics collaborates with Microsoft to advance the field of humanoid robots

Jan -07

Source:

What Kennametal (KMT)'s Cloud Tool Library Integration Means For Shareholders

Dec -25

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.33%)

6. Segments

Manufacturing Intelligence

Expected Growth: 5.5%

Hexagon AB's Manufacturing Intelligence segment growth of 5.5% is driven by increasing demand for digitalization and Industry 4.0 solutions. The segment's software and metrology solutions enable manufacturers to improve efficiency, quality, and productivity. Strong growth in automotive, aerospace, and energy sectors also contributes to this growth.

Geosystems

Expected Growth: 7.0%

Geosystems from Hexagon AB's growth of 7.0 is driven by increasing demand for geospatial solutions, expanding applications in urban planning, infrastructure development, and environmental monitoring. The segment's growth is also fueled by Hexagon's innovative technologies, strategic acquisitions, and strong presence in the global market, enabling the company to capitalize on emerging trends in geospatial intelligence and digital transformation.

Safety, Infrastructure & Geospatial

Expected Growth: 6.5%

Hexagon AB's Safety, Infrastructure & Geospatial segment growth of 6.5% is driven by increasing demand for smart infrastructure, urbanization, and government investments in public safety. Additionally, the segment benefits from Hexagon's geospatial solutions adoption and growth in recurring revenues from software subscriptions and services.

Asset Lifecycle Intelligence

Expected Growth: 5.8%

Hexagon AB's Asset Lifecycle Intelligence growth of 5.8% is driven by increasing demand for digital transformation, industrial automation, and geospatial solutions. Key drivers include expanding portfolio of software and services, strategic acquisitions, and growing adoption of Industry 4.0 technologies, enabling customers to optimize asset performance, reduce costs, and improve sustainability.

Autonomous Solutions

Expected Growth: 8.0%

Autonomous Solutions' growth is driven by increasing demand for autonomous technologies in industries like agriculture, mining, and construction. Hexagon AB's solutions enable efficient and precise operations, improving productivity and reducing costs. Strong R&D investments and strategic partnerships fuel innovation, expanding the segment's growth potential, resulting in an 8.0% growth rate.

Group Expenses and Eliminations

Expected Growth: 0.0%

The 0.0% growth in Group Expenses and Eliminations for Hexagon AB (publ) likely stems from efficient cost management and effective resource allocation. This stability may indicate a focus on optimizing operational expenses, minimizing eliminations, and maintaining a balanced financial structure, suggesting a strategic effort to enhance profitability and competitiveness.

7. Detailed Products

Autonomous Solutions

Hexagon's Autonomous Solutions provide a range of products and services that enable autonomous operations in various industries such as mining, construction, and agriculture.

Geospatial Mapping

Hexagon's Geospatial Mapping solutions provide accurate and detailed mapping and location-based intelligence for various industries such as government, transportation, and utilities.

Industrial Metrology

Hexagon's Industrial Metrology solutions provide precision measurement and inspection solutions for various industries such as aerospace, automotive, and manufacturing.

CAD/CAM Software

Hexagon's CAD/CAM Software solutions provide computer-aided design and manufacturing software for various industries such as aerospace, automotive, and industrial equipment.

Sensor and Software Solutions

Hexagon's Sensor and Software Solutions provide a range of sensors and software solutions for various industries such as agriculture, construction, and mining.

PPM (Project Portfolio Management)

Hexagon's PPM solutions provide project portfolio management software for various industries such as construction, oil and gas, and utilities.

8. Hexagon AB (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

Hexagon AB (publ) operates in a niche market with limited substitutes, but there are some alternatives available. The company's products and services are highly specialized, which reduces the threat of substitutes.

Bargaining Power Of Customers

Hexagon AB (publ) has a diverse customer base, which reduces the bargaining power of individual customers. The company's products and services are critical to its customers' operations, making it difficult for them to switch to alternative suppliers.

Bargaining Power Of Suppliers

Hexagon AB (publ) has a moderate level of dependence on its suppliers, particularly for raw materials and components. While the company has some bargaining power due to its size and reputation, suppliers also have some leverage due to the specialized nature of the products.

Threat Of New Entrants

The barriers to entry in Hexagon AB (publ)'s markets are relatively high, including significant capital requirements, technological expertise, and regulatory hurdles. This reduces the threat of new entrants.

Intensity Of Rivalry

Hexagon AB (publ) operates in a highly competitive market with several established players. The company faces intense competition in terms of product innovation, pricing, and customer service, which increases the intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	28.97%
Debt Cost	4.59%
Equity Weight	71.03%
Equity Cost	8.83%
WACC	7.61%
Leverage	40.78%

11. Quality Control: Hexagon AB (publ) passed 4 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

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

Flex

A-Score: 5.5/10

Value: 2.2

Growth: 7.1

Quality: 5.5

Yield: 0.0

Momentum: 9.0

Volatility: 9.0

1-Year Total Return ->

TE Connectivity

A-Score: 5.3/10

Value: 1.7

Growth: 6.6

Quality: 6.8

Yield: 2.5

Momentum: 8.5

Volatility: 6.0

1-Year Total Return ->

Hexagon

A-Score: 5.1/10

Value: 2.4

Growth: 5.6

Quality: 6.4

Yield: 3.8

Momentum: 6.5

Volatility: 6.0

1-Year Total Return ->

Check Point

A-Score: 4.7/10

Value: 2.5

Growth: 6.1

Quality: 8.5

Yield: 0.0

Momentum: 5.0

Volatility: 6.0

1-Year Total Return ->

Garmin

A-Score: 4.7/10

Value: 1.8

Growth: 6.4

Quality: 8.4

Yield: 3.8

Momentum: 3.0

Volatility: 4.7

1-Year Total Return ->

Capgemini

A-Score: 4.5/10

Value: 4.3

Growth: 6.0

Quality: 5.8

Yield: 3.1

Momentum: 2.0

Volatility: 5.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

36.16%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.61%

Hexagon AB (publ) - SE0015961909

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on HEXA

1.c. Company Highlights

Higher Yield

Less Volatile

Expensive

Revenues Miss

Fairly Valued

Revenues Beats

Average Yield

Earnings Miss

Weak Momentum

Average Quality

Medium Volatility

Stable Momentum

Earnings Beats

2. Hexagon's Q4 2025 Earnings: A Resilient Performance Amidst Currency Headwinds

Segment Performance

Financial Highlights

Valuation and Outlook

Cash Conversion and Margin Evolution

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.33%)

6. Segments

Manufacturing Intelligence

Expected Growth: 5.5%

Geosystems

Expected Growth: 7.0%

Safety, Infrastructure & Geospatial

Expected Growth: 6.5%

Asset Lifecycle Intelligence

Expected Growth: 5.8%

Autonomous Solutions

Expected Growth: 8.0%

Group Expenses and Eliminations

Expected Growth: 0.0%

7. Detailed Products

Autonomous Solutions

Geospatial Mapping

Industrial Metrology

CAD/CAM Software

Sensor and Software Solutions

PPM (Project Portfolio Management)

8. Hexagon AB (publ)'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: Hexagon AB (publ) passed 4 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

99.54$

Current Price

12.e Scoring ^Insights

12.f DCF ^BETA