Tieto (ex-TietoEVRY) has reshaped itself from a broad IT house into a ~EUR 1.8bn continuing group of three vertical software franchises — Banktech (bank payments), Caretech (Nordic healthcare) and Indtech — plus a Tech Consulting arm, after divesting Tech Services (2025), Bekk (Feb 2026) and Edlevo/HR&Payroll (Q2 2026). The software segments carry real switching costs and a EUR 2.1bn backlog; the consulting leg does not, and is where the weakness sits (organic -6%).
The story is profitability, not growth. A EUR 130m cost-out programme (EUR 115m run-rate booked) lifted adj-EBITA margin to 14.9% (+5.5pp YoY) with all four businesses improving, even as organic revenue fell 5%. On mttssn adjustments — stripping EUR 77.2m of divestment capital gains out of reported EBIT and rejecting the EUR 18.3m PPA-amortization add-back — adjusted ROIC is 13.0% against an 8% WACC, generating +EUR 83.4m of economic profit.
Balance sheet is materially de-risked: divestment proceeds cut net debt/EBITDA to 1.0x from 2.2x, funded a EUR 150m buyback (shares down to 114.67m) and a fresh EUR 90m programme. The offset is a roll-up profile — goodwill EUR 1,318m is 121% of equity — and a EUR 110m arbitration counterclaim tied to the Tech Services sale that management deems meritless but is unresolved for ~a year.
Capitalising adjusted NOPAT of EUR 216.5m at WACC-g and bridging EUR 388.8m net debt across 113.85m shares: fair value ~EUR 20.4 at zero growth (+17%), ~EUR 28 at 2% and higher above that. Even the no-growth case — appropriate given a -5% to -3% organic outlook — sits above the EUR 17.43 price, because the model rewards the above-WACC return rather than penalising the shrinking top line.
Multiples corroborate: EV/adj-EBIT 8.7x and P/E 9.1x for a 13% ROIC franchise mid-turnaround. Base EUR 20.5 (+18%) on zero-to-low growth and margin holding near 15%; bull EUR 26 as the >16% 2028 margin target lands and organic growth turns positive; bear EUR 14 (-20%) if consulting demand stays depressed, restructuring persists as recurring cost and the roll-up de-rates.
The market pays today’s enterprise value for roughly -11.5% NOPAT growth over 5 years. The business earns 13% on capital against a 8% cost of capital (spread +5.0 pp); the no-growth value is €24/share (136% of price), so the rest is priced-in growth.
| Scenario | 24m target | Impl. g | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | €26 | +4% | +49% | 30% | >16% 2028 margin lands; organic growth turns positive |
| Base | €20 | -5% | +18% | 45% | Zero-to-low growth; margin holds ~15%; reverse-DCF fair value |
| Bear | €14 | -19% | -20% | 25% | Consulting stays weak; restructuring recurring; roll-up de-rates |
| Prob-weighted | €21 | — | +18% | 100% | Scenario-weighted expected value |
| WACC \ g | 0% | 3% | 5% | 8% | 10% | 15% |
|---|---|---|---|---|---|---|
| 6.50% | 33 | 37 | 39 | 43 | 45 | 53 |
| 7.25% | 28 | 30 | 32 | 35 | 37 | 42 |
| 8.00% (base) | 24 | 26 | 27 | 29 | 30 | 34 |
| 8.75% | 21 | 22 | 23 | 24 | 26 | 28 |
| 9.50% | 18 | 19 | 20 | 21 | 22 | 24 |
Green = fair value above the current price of €17.43. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.
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EUR 115m of EUR 130m run-rate savings booked; adj-EBITA margin +5.5pp to 14.9% with a >16% 2028 target — self-help driving the return spread.
Adj ROIC 13% vs WACC 8%, EP +EUR 83.4m — genuine value creation, unusual at 8.7x EV/adj-EBIT.
Net debt/EBITDA 1.0x from 2.2x on divestment proceeds; funds EUR 150m + EUR 90m buybacks, shares cut to 114.67m.
Banktech/Caretech/Indtech run mission-critical platforms with multi-year contracts and EUR 2.1bn backlog — the resilient, higher-margin core.
Fair value above price even at zero growth — a real, if moderate, margin of safety on falling revenue.
Tieto is a restructured, de-levered Nordic software-and-consulting franchise the market prices for continued decline: adj ROIC 13% > WACC 8%, EP +EUR 83m, adj-EBITA margin up 5.5pp, at EV/adj-EBIT 8.7x and below no-growth reverse-DCF value. The vertical-software core and 1.0x leverage make the falling top line survivable. BUY, medium conviction; base target EUR 20.5 (+18%).
The watch-items are Tech Consulting stabilisation, the legacy-contract phase-out completing on schedule, and clean free-cash-flow conversion. Confirmation on those — or the arbitration resolving benignly — would support a conviction upgrade; a further consulting leg-down would push the thesis toward the bear case.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| LTM revenue 1793.3 (FY2025 1852.3 - H1'25 933.9 + H1'26 874.9) | 1,793 | Income statement p.18 + Quarterly figures p.34 📄 p.18 | Continuing-operations revenue; LTM bridged over the Tech Services / Bekk / Edlevo divestments using restated columns. |
| LTM reported EBIT 306.5 | 306 | Income statement p.18 / Quarterly EBIT p.34 📄 p.18 | Sum of quarterly EBIT Q3'25 56.5 + Q4'25 58.8 + Q1'26 79.6 + Q2'26 111.6; inflated by 77.2m divestment gains. |
| Company adjusted EBITA (LTM) 292.3 | 292 | Reconciliation of adjusted operating profit (EBITA) p.32 📄 p.32 | FY 256.5 - H1'25 93.5 + H1'26 129.3; strips capital gains, restructuring, impairment, PPA amort. |
| PPA amortization add-back we reject (LTM) 18.3 | 18.3 | Amortization of intangibles recognized at fair value from acquisitions p.32 📄 p.32 | Acquisition-intangible amort; mttssn keeps in opex as a real cost of the roll-up. |
| Divestment capital gains stripped (LTM) 77.2 | 77.2 | Capital gains p.32 + Acquisitions and divestments p.28-30 📄 p.32 | Edlevo/HR&Payroll 57.1m + Bekk 20.1m; one-off, removed from operating profit. |
| Total equity 30 Jun 2026 1088.1 | 1,088 | Statement of financial position p.19 📄 p.19 | Continuing-group equity, snapshot for IC. |
| Cumulative translation differences (OCI) -196.8 | -197 | Statement of changes in equity p.20 📄 p.20 | Stripped from equity for IC (equity_ex_oci = 1284.9). |
| Interest-bearing debt 621.8 (loans 608.4 + 13.4) | 622 | Statement of financial position p.19 📄 p.19 | Non-current + current loans; leases excluded from IC (office ROU peripheral). |
| Cash & equivalents 301.5 (incl 25.1 restricted Ukraine) | 302 | Statement of financial position p.19 note 1 📄 p.19 | op cash floored at 2% revenue; excess 265.6 removed from IC. |
| Goodwill 1318.5 | 1,318 | Statement of financial position p.19 📄 p.19 | 121% of equity — roll-up profile flag. |