Embracer Group AB (EMBRAC.B) AI Stock Analysis

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Embracer Group AB

(OTC:EMBRAC.B)

48Neutral

Embracer Group AB's overall stock score is primarily impacted by its weak financial performance, characterized by declining revenues and profitability, and negative cash flow. Technical analysis indicates a bearish trend with potential volatility, while valuation metrics are unattractive due to ongoing losses and no dividend yield. These factors combine to result in a below-average stock score.

Embracer Group AB (EMBRAC.B) vs. S&P 500 (SPY)

Market Cap

$27.48B

Dividend YieldN/A

Average Volume (3M)591.11K

Price to Earnings (P/E)―

Beta (1Y)1.20

Revenue Growth-23.34%

EPS Growth-1681.97%

CountrySE

Employees7,873

SectorCommunication Services

Sector Strength88

IndustryElectronic Gaming & Multimedia

Share Statistics

EPS (TTM)0.99

Shares Outstanding216,119,700

10 Day Avg. Volume468,073

30 Day Avg. Volume591,105

Financial Highlights & Ratios

PEG Ratio-0.63

Price to Book (P/B)2.99

Price to Sales (P/S)0.00

P/FCF Ratio-28.29

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$106.89

Price Target Upside-12.43% Downside

Rating ConsensusHold

Number of Analyst Covering2

Embracer Group AB Business Overview & Revenue Model

Company DescriptionEmbracer Group AB (publ), together with its subsidiaries, develops and publishes PC, console, mobile, VR, and board games for the games market worldwide. The company has a catalogue of approximately 850 owned franchises, such as Saints Row, Goat Simulator, Dead Island, Darksiders, Metro, MX vs ATV, Kingdoms of Amalur, TimeSplitters, Satisfactory, Wreckfest, Insurgency, World War Z, and Borderlands, and others. It also publishes films and comics. It distributes games through retailers and digital distributors. The company was formerly known as THQ Nordic AB (publ) and changed its name to Embracer Group AB (publ) in October 2019. Embracer Group AB (publ) was incorporated in 1999 and is headquartered in Karlstad, Sweden.

How the Company Makes MoneyEmbracer Group AB generates revenue primarily through the sale of video games and related content. The company's key revenue streams include direct sales of video game titles across digital and physical platforms, licensing of its extensive library of intellectual properties, and monetization of in-game content such as downloadable content (DLC), expansions, and microtransactions. Additionally, Embracer Group benefits from strategic partnerships and collaborations with other companies in the gaming industry, which can include co-publishing deals, distribution agreements, and development collaborations. The company also invests in acquiring gaming studios and intellectual property rights to expand its portfolio and enhance its revenue potential.

Embracer Group AB Financial Statement Overview

Summary

Income Statement

Balance Sheet

Cash Flow

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
20.73B	42.21B	37.66B	17.04B	9.02B	5.25B
	Gross Profit
17.03B	30.78B	27.68B	14.63B	6.70B	3.43B
	EBIT
-2.70B	-20.52B	6.27B	-3.38B	753.50M	345.40M
	EBITDA
6.34B	4.76B	11.69B	4.07B	4.07B	1.90B
	Net Income Common Stockholders
-3.87B	-18.18B	4.45B	-4.29B	287.00M	284.90M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.93B	3.34B	4.68B	5.81B	14.30B	2.51B
	Total Assets
8.61B	95.70B	116.07B	93.45B	33.75B	10.64B
	Total Debt
898.90M	21.18B	21.75B	20.31B	1.48B	1.46B
	Net Debt
-2.03B	17.84B	17.09B	14.50B	-12.63B	-853.30M
	Total Liabilities
2.90B	43.21B	51.35B	48.64B	6.59B	4.24B
	Stockholders Equity
5.71B	52.42B	64.67B	44.59B	27.15B	6.37B
Cash Flow		Free Cash Flow
-452.70M	529.00M	-1.61B	220.70M	1.69B	32.60M
	Operating Cash Flow
4.01B	7.89B	5.38B	4.28B	3.90B	1.73B
	Investing Cash Flow
-36.90B	-9.95B	-15.49B	-37.89B	-6.80B	-2.63B
	Financing Cash Flow
31.77B	832.00M	8.50B	25.02B	14.73B	473.40M

Embracer Group AB Technical Analysis

Technical Analysis Sentiment

Positive

Last Price122.06

Price Trends

50DMA

110.28

Positive

100DMA

142.61

Negative

200DMA

152.89

Negative

Market Momentum

MACD

3.11

Negative

RSI

64.06

Neutral

STOCH

69.38

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SE:EMBRAC.B, the sentiment is Positive. The current price of 122.06 is above the 20-day moving average (MA) of 115.19, above the 50-day MA of 110.28, and below the 200-day MA of 152.89, indicating a neutral trend. The MACD of 3.11 indicates Negative momentum. The RSI at 64.06 is Neutral, neither overbought nor oversold. The STOCH value of 69.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SE:EMBRAC.B.

Embracer Group AB Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	60 Neutral	$13.79B	7.12	-2.72%	3.79%	2.18%	-42.65%
EMBRAC.B	48 Neutral	$27.48B	―	-33.67%	―	-23.34%	-1681.97%

* Communication Services Sector Average

Performance Comparison

SE:EMBRAC.B

Embracer Group AB

127.48

-52.82

-29.30%

PRXXF

Paradox Interactive AB

20.75

5.40

35.18%

SE:FLEXM

Flexion Mobile

5.12

-4.14

-44.71%

GENTF

G5 Entertainment AB

12.72

-0.10

-0.78%

DE:5WF

Gaming Corps AB

0.08

>-0.01

-11.11%

DE:5ZD0

Fragbite Group AB

0.57

-2.43

-81.00%

Embracer Group AB Earnings Call Summary

Earnings Call Date:Feb 13, 2025

(Q2-2025)

% Change Since: -18.08%|

Next Earnings Date:May 22, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed outlook with significant challenges including declining sales and cash flow issues, particularly in the PC/Console and Entertainment & Services segments. However, the divestment of Easybrain and strong Asmodee performance provide a positive outlook for financial stabilization and future growth opportunities.

Q2-2025 Updates

Positive Updates

Successful Easybrain Divestment

The divestment of Easybrain to Miniclip for USD 1.2 billion (SEK 12.9 billion) is expected to significantly strengthen Embracer's financial position, reducing net debt to approximately SEK 500 million on a pro forma basis.

Strong Asmodee Performance

Asmodee reported a solid earnings growth year-over-year with a profitability of SEK 700 million in the quarter, driven by a favorable product mix and successful game releases.

Mobile Games Profitability

The Mobile Games segment reported SEK 1.3 billion in revenues with a 28% adjusted EBIT margin, despite a decline in daily active users.

Positive Outlook for Kingdom Come: Deliverance II

No delays are expected for the release of Kingdom Come: Deliverance II in February 2025, and it is anticipated to be a significant contributor to future earnings.

Negative Updates

Decline in Net Sales

Net sales decreased by SEK 2.3 billion year-over-year, primarily due to the lack of major new releases and divestments of Saber and Gearbox.

Negative Free Cash Flow

Free cash flow was negative at minus SEK 473 million for the quarter, largely due to increased working capital and inventory buildup.

PC/Console Segment Underperformance

The PC/Console segment experienced a negative organic growth of 33% and a profitability of only 8%, impacted by weaker ROI and delayed game releases.

Challenges in Entertainment & Services

The Entertainment & Services segment saw a negative 9% organic growth year-over-year, with only a 2% adjusted EBIT margin.

Company Guidance

During the Q2 2025 earnings call for Embracer Group, CEO Lars Wingefors provided comprehensive guidance on several key performance metrics. The company reported SEK 8.5 billion in net sales for the quarter, reflecting a decline year-over-year, primarily due to the absence of significant releases like Remnant and Payday from the previous year. The adjusted EBIT was SEK 1.2 billion, with free cash flow showing a negative SEK 500 million, influenced by increased working capital and inventory buildup. Notably, Asmodee exhibited strong earnings growth with profitability reaching SEK 700 million. PC/Console segment's organic growth was down by 33%, affected by weaker ROI and game release delays, though an improved performance is expected in the second half of the year. The mobile games segment recorded revenues of SEK 1.3 billion with a 28% adjusted EBIT margin, despite a decline in daily active users attributed to a business model shift within CrazyLabs. The divestment of Easybrain for USD 1.2 billion is expected to significantly enhance Embracer's financial position, reducing net debt substantially.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.