Addtech is a Swedish group of well over a hundred small technology companies, and it has been one of the best compounders on the Stockholm exchange: earnings per share up from SEK 4.00 to SEK 7.95 in four years. On 22 October it reported a second quarter that beat the consensus on profit. The stock fell about 8% in two sessions and printed a low near 300. This issue runs Addtech through the Six Gates and merges in the full Cantillon File, so the business case and the price case sit on one page. The short answer, free: the business passes cleanly, and the beat was smaller than it looked. Whether the stock passes is a different question, and the chart and the valuation model answer it the same way.
The Six Gates run in order, and each one can stop the work. Gate 0 asks whether the market regime allows a long at all. Gate 1 tests the business. Gate 2 prices three worlds, bear, base and bull. Gate 3 lists the events that move the price, with dates. Gate 4 reads institutional flow on the IVT terminal. Gate 5 argues both sides, gives a verdict, and sets the entry, the size and the level that voids it all, before any money moves.
Addtech also has a Nordic Cantillon File, built mechanically from its annual reports. Our rule is one analysis per company, so the File's findings sit inside this issue as their own chapter, after Gate 1.
Longs need a tailwind of 0 or better. It reads +2 on both clocks, so Addtech goes through. The two clocks do not tell the same story, and that is normal: the daily has money and stocks both flowing, while the weekly still has only money flowing and its strength at -4, labelled deteriorating. Different clocks, not a contradiction. Participation confirms on both: 65% of stocks sit above their 50-day average.
One honest caveat. These regime layers are the terminal's market-wide proxies, bonds, the S&P 500 and Bitcoin, read on Addtech's chart. They tell us whether the tide is in. They do not say anything about Swedish industrial demand, which is Gate 1's job.
Addtech buys small, profitable technical companies, usually founder-run, and leaves them alone. Each one solves a narrow problem for industrial customers: a sensor, a drive, a cable system, a safety product, often in small volumes and adapted to the job. That niche work is why a business that looks like distribution earns margins like a manufacturer. The profit then funds the next acquisition. Since December 2025 the group reports in six business areas: Automation, Electrification, Energy, Industry, Process and Safety.
The second quarter, July to September 2026: sales up 8% to SEK 5,907m, of which 2% organic, 5% from acquisitions and 1% currency. EBITA, profit before the write-down of acquired intangibles, rose 17% to SEK 987m, a 16.7% margin. Consensus had been about SEK 936m to 940m.
| Check | Q2 2026/27 | What it says |
|---|---|---|
| The beat | SEK 987m vs ~936m | About SEK 55m of it is one-off: earn-outs written off in Safety, net of restructuring. Without it, EBITA was about SEK 932m. In line, not a beat. |
| Organic growth | 2% (H1: 1%) | Full year 2025/26 was 2%, the last quarter of it 0%. Lagercrantz printed 12% the next day, Indutrade 5%, Lifco 1.6%. |
| Where it grew | Automation +20% · Electrification +31% | Grid infrastructure and automation carry the group. Finland and Denmark good, Sweden and Norway weak. |
| Where it shrank | Industry -7% | Sales SEK 1,080m against 1,163m, margin down to 18.1% from 19.3%. Construction, forestry and parts of process industry are soft. |
| Margin, rolling 12 months | 16.5% EBITA | Operating margin after acquisition write-downs rose every year, from 10.7% in 2021/22 to 14.0% now. The core of the case. |
| Return on working capital | 82% | The group's own target is above 45%. Return on equity 29%, on capital employed 22%. |
| Cash from operations, H1 | SEK 1,332m vs 1,336m | Flat while profit rose 14%. Working capital absorbed the difference. |
| Acquisitions this year | 4 deals, ~SEK 500m sales | Last year: 9 deals, ~SEK 1,595m. The pace has slowed, and the CEO says the pipeline supports a high pace again. |
| Debt | 1.5x EBITDA | Interest covered 14.4 times. Net debt excluding pensions SEK 6.2bn. Room for many more deals. |
Our red flag score is 3 of 10, against a kill line of 7. Three things carry it. Organic growth has been close to zero for a year while peers grow. Earn-out write-downs added SEK 80m to first-half profit against SEK 21m a year earlier, and an earn-out is only written down when an acquired company misses the targets it was bought on. And cash flow stood still while profit rose. None of these breaks the business. All three say the same thing: the last twelve months of profit growth came from acquisitions and accounting, not from the existing companies selling more.
The numbers behind the business, from its own annual reports. The full File updates with every report.
Members unlock Gates 2 to 5 on Addtech: what today's price assumes and the three valuation worlds with their price zones, the adjusted debt bridge, the dated catalyst calendar, the full IVT read on the weekly and daily, the committee debate, the verdict, the two entry plans with size, invalidation and targets, and the source of every number.
Every Friday the complete daily brief ships open, with all levels and every terminal capture.
Addtech stays on the Six Gates watchlist. Gate 0 is read every morning in the daily brief. Gate 4 is re-read after every weekly close. Gates 1 to 3 run again at the third-quarter report in late January, and the Nordic Cantillon File rebuilds after each annual report. If an entry plan triggers before then, members get it in the brief, with the size and the invalidation set before the trade, not after.
EBITA operating profit before the write-down of intangible assets from acquisitions, the measure serial acquirers report on · Organic growth sales growth from companies owned a year ago, excluding acquisitions and currency · Earn-out part of an acquisition price paid later, only if the bought company hits agreed targets; writing one down raises profit · Return on working capital EBITA divided by stock plus receivables minus payables, Addtech's own target measure · Owner earnings cash from operations minus investment and lease payments · Implied growth the yearly growth in owner earnings, for ten years, that today's price needs to return 9% · Cost line the anchored VWAP, the average price large money has paid since a chosen point · Entry window entries only while price is within 3% of the cost line · Tailwind for longs the Cantillon macro bonus; longs need 0 or better · Light the terminal's record on this name, in R; red means no new entries · S2, S3 signal tiers; higher means more independent confirming factors · R one standard unit of risk.