Arttu has written a company report on Kesko following its Q2 results. 
Kesko’s Q2 results improved significantly, driven by the building and technical trade. We see the group’s earnings growth continuing in H2 and strengthening in the coming years, which, in our view, brings Kesko’s forward-looking valuation multiples to moderate levels.
Excerpts from the report:
We believe the organic growth outlook is good
We feel Kesko’s guidance appears slightly cautious, and there may be upside potential at the midpoint. This assumes that the strong H1 trend continues in the building and technical trade, that the car trade order backlog (+40% y/y) is converted at good margins, and that there is earnings improvement in the grocery trade. We forecast an operating profit of EUR 706 million for the current fiscal year, with the most significant drivers being the building and technical trade’s strong, above-market growth and improved product margins.
In the medium term, we believe the group’s earnings will improve, driven by each of its business divisions. However, the building and technical trade represents the relatively largest growth, supported by a historically weak construction market. Our forecasts are therefore based on a market recovery; without it, they may prove too optimistic. Other risks to our forecasts include changes in the competitive landscape of the grocery trade and the multiplier effects of geopolitical tensions on the macroeconomy.