Fundamentals:
Scandinavian Tobacco Group (STG) posted interim results that showed earnings per share (EPS) of DKK 1.34, up 9 % from the same quarter of 2024 and roughly 3 % above the consensus “beat‑and‑up” estimate of DKK 1.30. Net revenue rose 4 % to DKK 1.42 bn, still lagging the modest 5 % YoY growth trend the company has been building since 2022, but comfortably ahead of analysts’ pooled forecast of DKK 1.38 bn. The margin expansion – operating margin now at 11.8 % versus 10.5 % in Q4 2024 – reflects the successful rollout of higher‑margin premium‑cigar products and better freight‑cost management, a point repeatedly flagged by the sell‑side.
Market dynamics & technicals:
The earnings beat gave the stock a short‑run boost, with the price breaking above the 20‑day SMA and retesting the July‑2025 high of DKK 155.0 on higher volume. Relative strength is now at 70, comfortably above its 50‑day RS threshold, while the MACD histogram has turned positive, signaling a bullish momentum shift. However, the modest revenue tail‑off versus the prior‑year trend means the upside may be capped unless the new product pipeline delivers a clearer growth trajectory.
Trading implications:
Given the EPS beat and steady, though slightly slower, top‑line growth, the current risk‑reward profile leans toward a light‑to‑moderate long‑position. A prudent entry point would be near the pull‑back to the 20‑day SMA (around DKK 152.5), with an initial stop just below the 50‑day SMA (≈ DKK 148). If the company’s premium‑cigar rollout accelerates and the top‑line starts out‑pacing consensus, upside to the July‑2025 high and possibly the next resistance at DKK 160 becomes viable. Conversely, if revenue momentum eases further, expect a retracement toward the 50‑day SMA and a test of the June‑2025 low (DKK 145) as the first defensive level.