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 AB's recent performance has been positively driven by strategic portfolio optimization and expansion into high-growth areas. The company's sale of its Design & Engineering business to Cadence Design Systems for €2.7 billion reflects its focus on creating market-leading positions. Additionally, Hexagon's commitment to delivering secure technologies for critical missions, as seen in its Hexagon US Federal division, underscores its dedication to key sectors. The company's presence in the growing AI in Construction market, driven by automation and digital collaboration, also presents opportunities for growth.

1.c. Company Highlights

Last Price	110.95
Change Percentage	-0.94%
Open	111.9
Previous Close	112
Market Cap ( Millions)	285599
Volume	2178587
Year High	130.55
Year Low	82.8
M A 50	113.62
M A 200	105.27

FCF Yield	3.88%
Dividend Yield	1.41%
ROE	8.90%
Debt / Equity	43.94%
Net Debt / EBIDTA	196.22%
Price To Book	2.72
Price Earnings Ratio	28.89
Price To FCF	25.78
Price To sales	4.8
EV / EBITDA	15.35

2. Hexagon's Q3 2025 Earnings: A Mixed Bag

Hexagon reported revenue of EUR 1.3 billion in Q3 2025, with an organic growth of 4%. The adjusted operating margin was 27% for Hexagon core, while the EPS came in at EUR 1.06, beating estimates of EUR 1.03. The company's gross margin remained stable at 67%, and operating earnings decreased by 7% to EUR 349 million. The strong cash flow was evident, with adjusted EBITDA variance at -2% and cash conversion of 77%.

Publication Date: Oct -25

                                    📋 Highlights
                                    Organic Growth & Margin Progress:
                                                Hexagon core achieved 5% organic growth (Q3) and 27% adjusted operating margin, while Autonomous Solutions surged 19% organically (Q3).
Cost Efficiency Program:
                                                EUR 110 million savings target identified (EUR 74 million Hexagon core, EUR 36 million Octave), with full effect expected by Q4 2026.
Strategic Transactions:
                                                Sale of D&E business to Cadence for EUR 2.7 billion and EUR 186 million impairment charge for Hexagon core (R&D, inventory, discontinued products).
Octave Performance:
                                                Octave reported EUR 1.5 billion annual revenue, 1% organic growth, and 26% operating margin, with SaaS revenue growing 6% (Q3).
Financial Leverage:
                                                Q3 revenue of EUR 1.3 billion (4% organic growth), 67% gross margin stability, and 77% cash conversion, despite operating earnings dropping 7% to EUR 349 million.

                                

Segment Performance

The company's segments showed varying performance. Manufacturing Intelligence reported revenues of EUR 445 million, with a 3% organic growth, driven by general manufacturing and electronics. Geosystems reported revenues of EUR 353 million, with a 1% organic growth. Autonomous Solutions delivered revenues of EUR 178 million, with a 19% organic growth, driven by aerospace and defense, mining, and agriculture. However, agriculture remains a challenging area due to a serious downturn.

Octave's Performance and Spin-Off

Octave, which is set to be spun off in the first half of 2026, reported revenue of EUR 1.5 billion last year, with high recurring revenue and profitability. In Q3 2025, Octave's organic growth was 1%, but recurring revenue grew 6%. The company's SaaS revenue grew strongly, driven by customer additions and seat growth. Hexagon's CEO mentioned that the U.S. government shutdown is impacting the SEC and review process, but the company remains on track to complete the spin-off.

Cost Savings and Impairments

The company has identified EUR 110 million of potential savings across Hexagon Group, with EUR 74 million related to Hexagon core and EUR 36 million related to Octave. Hexagon core also took a charge of EUR 186 million related to innovation history, inventory, and discontinued products. The impairments are not intended to improve results but to set a new baseline for managing divisions and business areas based on operational performance.

Valuation Metrics

With a P/E Ratio of 31.5 and EV/EBITDA of 16.56, the market is pricing in a certain level of growth. The company's ROE is 8.9%, and ROIC is 7.13%. Analysts estimate next year's revenue growth at 3.6%. The dividend yield is 1.29%, and the free cash flow yield is 3.56%. These metrics suggest that the company is reasonably valued, but the market is expecting growth to justify the current valuation.

3. NewsRoom

CTSH vs. HXGBY: Which Stock Is the Better Value Option?

Dec -05

Source:

ETQ Launches ETQ Reliance Go™, Delivers Automated Quality Management for Small- to Mid-Sized Manufacturers

Dec -03

Source:

LiDAR Market Competitive Landscape Report 2025: Key Players Analysis Recent Developments, Company Strategies, Sustainability Benchmarking, Product Launches, Key Persons, and Revenue Forecasts

Nov -24

Source:

Is Hexagon Fairly Priced After 20.9% Gain and Recent Tech Partnerships?

Nov -20

Source:

LearnUpon Acquires AI Learning Creation Platform Courseau

Nov -19

Source:

Inertial Sense to Join Hexagon, Strengthening Global Leadership in Precision Navigation and Autonomous Solutions

Nov -11

Source:

Hexagon to acquire Inertial Sense, strengthening its positioning portfolio

Nov -10

Source:

Hexagon and Management Controls Deliver Real-Time Contractor Cost Reporting with Launch of EcoSys + myTrack Connector

Oct -28

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: 5.9/10

Value: 3.2

Growth: 7.1

Quality: 6.5

Yield: 0.0

Momentum: 9.0

Volatility: 9.3

1-Year Total Return ->

Garmin

A-Score: 5.6/10

Value: 1.3

Growth: 6.4

Quality: 8.4

Yield: 3.8

Momentum: 9.0

Volatility: 4.7

1-Year Total Return ->

TE Connectivity

A-Score: 5.5/10

Value: 1.8

Growth: 6.6

Quality: 6.8

Yield: 2.5

Momentum: 8.5

Volatility: 7.0

1-Year Total Return ->

Hexagon

A-Score: 5.1/10

Value: 2.2

Growth: 5.4

Quality: 6.8

Yield: 5.0

Momentum: 6.0

Volatility: 5.0

1-Year Total Return ->

Capgemini

A-Score: 4.6/10

Value: 4.9

Growth: 6.1

Quality: 5.5

Yield: 3.8

Momentum: 1.0

Volatility: 6.0

1-Year Total Return ->

Check Point

A-Score: 4.5/10

Value: 1.9

Growth: 6.1

Quality: 8.8

Yield: 0.0

Momentum: 4.0

Volatility: 6.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

39.19%

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 Q3 2025 Earnings: A Mixed Bag

Segment Performance

Octave's Performance and Spin-Off

Cost Savings and Impairments

Valuation Metrics

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

110.95$

Current Price

12.e Scoring ^Insights

12.f DCF ^BETA