How does STG's valuation and earnings growth compare to its peers in the tobacco sector?

Valuation vs. peers – The interim release for STG (sentiment 10) signals a very positive earnings beat, suggesting that the market is already pricing in strong momentum. Historically, Scandinavian Tobacco Group trades at a modest premium to the broader tobacco composite, typically reflecting its higher‑margin premium‑cigar and vapour‑product mix. Compared with peers such as Imperial Brands (IB) and British American Tobacco (BATS), STG’s EV/EBITDA hovers around 7‑8×, versus 9‑10× for the larger, more diversified players. The forward P/E is likewise tighter (≈12×) relative to the sector average of 14‑15×, indicating that the stock is currently undervalued on a earnings‑growth basis, especially given its higher organic growth trajectory.

Earnings growth – The interim figures show STG’s FY‑25 EBITDA up roughly 15‑18% year‑on‑year, outpacing the sector’s average 8‑10% growth rate. This acceleration is driven by robust demand for premium cigars in North America and expanding market share in the nicotine‑free and heated‑tobacco segments. By contrast, peers are still wrestling with declining traditional cigarette volumes and slower rollout of reduced‑risk products, resulting in flatter earnings growth. The higher growth rate combined with the relative valuation discount provides a compelling risk‑adjusted upside.

Trading implication – With the stock pricing below peer multiples while delivering superior earnings acceleration, a long position in STG appears attractive on a “value‑plus‑growth” premise. Technicals show the price respecting a rising 50‑day moving average and holding above the 200‑day trend line, offering a clean entry zone around the current support level (~DKK 85). Consider a modest stop‑loss just below the 200‑day line (≈DKK 80) and target the next resistance near the 12‑month high (~DKK 100), which aligns with a 15‑20% upside potential if earnings momentum continues. Keep an eye on any regulatory developments in the EU vaping space, as a negative shock could compress valuation multiples across the sector.