Emak (EM) – A Family-Controlled Italian Acquisitive Conglomerate at 0.81x TB
Getting There in Terms of Valuation, but Would Like it a Bit Cheaper
Emak S.p.A. (EM) is an Italy-based industrial group focused on outdoor power equipment, pumps and high-pressure water jetting, and related components & accessories. Through a portfolio of specialized brands, the group serves global gardening, forestry, agriculture, industrial cleaning and water-jetting end-markets with chainsaws, brushcutters, lawnmowers, garden tractors, tillers, centrifugal and diaphragm pumps.
This is the 17th write-up of our net-net / deep value project through which we aim to look under the hood on all “quality” net-nets and P/TB cases on the Western markets. Read our full disclaimer on the site. This is written for entertainment and informational purposes only. Not investment advice. The author does not own any shares in Emak.
Summary
Since 2018, the stock has delivered a CAGR of -3.6% (incl. dividends), while TB/share (+ dividends) has increased by 11% annually. This is explained by a multiple contraction; P/TB declined from 2.83x to 0.81x
EM came to this valuation through mediocre growth, modest profitability and somewhat high leverage, compounded by a weak 1Q26 – eroding Mr. Market’s hope of a turnaround
EM has traded below P/TB 0.81x on 12% of the trading days since late 2012. This is not a “far-from-equilibrium-situation” in terms of market perception
Some of the short-term levers for improvement are constrained by somewhat high leverage and a controlling shareholder group
Decent upside at normalization, possibly +25-30% p.a. for the next few years, and possibly magnified by low supply of shares (free float c. 27%), but without clear drivers or rare valuation an investor may need patience for this cyclical industrial with limited visibility
Emak – Operations, Financial History & Capital Allocation
Emak S.p.A. (EM) is an Italy-based industrial group, with HQ in Bagnolo in Piano, Reggio Emilia, created in 1992 through the merger of Oleo-Mac (founded in 1972 as a chainsaw producer) and EFCO (founded in 1978 as a brushcutter producer) and has been listed in Milan since 1998.
The group has 24 plants spread over three divisions: Outdoor Power Equipment (€186m, 30% of 2025 sales), Pumps & Water Jetting (€244m, 40%), and Components & Accessories (€182m, 30%). In 2025, EM generated €612m of sales, up 1.8% y/y, split geographically between Europe at €378m (62%), the Americas at €169m (28%), and Rest of World at €66m (11%). EM has direct presence in 15 countries and a distribution network covering five continents. End customers and channels vary by product line and include specialist dealers, distributors, OEMs, farmers, contractors, large-scale retail, and online channels.
Outdoor Power Equipment includes brushcutters, lawnmowers, tractors, chainsaws, motor hoes, and small agricultural machines under brands including Oleo-Mac, Efco, Bertolini, Nibbi, and Staub; Pumps & Water Jetting covers agricultural pumps and sprayers, industrial high-pressure and ultra-high-pressure pumps up to 2,800 bar, water blasting systems, urban cleaning equipment, pressure washers, scrubber-dryers, sweepers, and vacuum cleaners; Components & Accessories supplies trimmer line and heads, chainsaw sharpeners, guns, valves and nozzles for pressure washers, industrial washing and car wash, plus precision-farming products.
Since 2017, EM has grown sales by a CAGR of 3.5%. The company has been profitable every year since 2007 and during the past decade the median EBIT margin was 6.7% (5.2% on a TTM basis). The company had a covid-boom in 2021 with sales up 25% y/y. Since then, sales have basically been hovering around €600m.
Since 2017, TB/share has increased at a rate of 11% p.a. (including dividends). Over the last decade, there has been quite some M&A activity, with a total of €85m spent on acquisitions since 2017. See table below for a few of the larger transactions.
EM has a relatively geared balance sheet with a net gearing of 94% which is a little higher than the 10y median.
ND/EBITDA is currently historically high at 3x, due to a bit subdued EBITDA levels. Per the latest annual report, the company fulfilled all covenants and most of the debt is due after March 2027, but they have c. €78m that needs to be refinanced within the next year.
The Market & Sector
EM operates across a diversified set of niche equipment and component markets. The common thread across these markets is exposure to maintenance, cleaning, gardening, agriculture and fluid-handling applications, with demand driven by a mix of replacement cycles, professionalization, regulation, water efficiency, automation and installed-base utilization.
Market growth is typically in the c. 3-7% CAGR range, with higher growth pockets in precision spraying, micro-irrigation, battery-powered tools and higher-specification components. Structurally, the group’s end markets are fragmented and competitive, with limited pricing power in commoditized products but better margin potential in branded, engineered or mission-critical applications.
What took EM to the Land of Deep Value?
EM arrived at deep value land through mediocre growth, modest profitability, leverage, and a market that has little patience for cyclical industrials with limited visibility. 2025 was better than 2024: revenue rose slightly to €612m, EBITDA improved to €66.8m (€60.9m) and net income more than doubled to €14.2m (€6.5m). But this was still only a 2.3% net margin and a 5.6% operating margin, against a balance sheet that per 1Q26 is carrying €184m of net financial debt (94% net gearing).
The recent improvement has now been followed by another wobble. In 1Q26, revenue fell 8.1% to €176.7m, EBITDA fell to €22.9m (€26.5m) and EBIT fell to €15.0m (€18.3m). The weakness was broad-based: Outdoor Power Equipment was down 8.3%, Pumps & Water Jetting down 4.2%, and Components & Accessories down 13.2%. Management points to customer inventory normalization, weaker private-consumer demand, a tougher competitive environment, tariffs and some geopolitical disruptions.
EM closed the liquidation of Emak Deutschland in 2025, liquidated PNR EE in Poland, and is rationalizing its Swedish structure through the Markusson / PNR Nordic reorganization. These are not necessarily signs of distress - the group remains profitable - but this reinforces the perception of turmoil.
For 2026 the focus is on strengthening the financial structure, improving competitive positioning and optimizing costs and investments. The company still proposes a dividend of €0.03 per share for 2025 (c. 3% yield), up from €0.025 for 2024.
What is the Company Doing to Leave Deep Value Territory?
Management time is partly spent on simplification, cost efficiency, portfolio clean-up and proactive handling of future disruptions. In 1Q26, the group was already seeing some evidence of this in Pumps & Water Jetting, where EBITDA was broadly stable despite lower sales (better product mix and lower operating costs). EM did not buy back shares in 2025 or in 1Q26, suggesting that balance-sheet preservation and operating flexibility remain high priorities.
Management says the 1Q26 decline was not a surprise and that planned actions are in place to contain the adverse effects; if market conditions normalize, it expects a progressive recovery in sales and margins during the year.
Shareholders, Management, Board & Incentives
EM is controlled by Yama S.p.A., a private investment holding company rooted in the industrial district of Reggio Emilia and owned by a consortium of entrepreneurial families. Yama was created in 1989 and has remained the stable controlling shareholder since EM’s listing in 1998. EM itself was created in 1992 through the combination of Oleo-Mac and Efco, two local outdoor power equipment businesses founded in the 1970s. Yama owns roughly 69% of Emak today.
The founding generation, led by Ariello Bartoli, created and consolidated the business over several decades, while the second and third generations now occupy board and management roles, most visibly through Luigi Bartoli, Emak’s CEO.
The families have occasionally monetized part of their holding, notably through the 2017 share placement (Yama sold 16.4m shares at €1.71 per share for €28m to institutional investors through an accelerated bookbuilding process). For minority shareholders, the key implication is that governance, capital allocation and succession is shaped by a tightly knit group of Reggio Emilia families whose wealth and reputation remain closely tied to the company.
During 2025-2026, A. Bartoli (founder of Oleo-Mac, Chairman of Yama and current EM director) bought approximately 7.18m shares for €6.10m, including a large 6.14m-share purchase at €0.80 per share in April 2025 and a further 1.10m-share purchase at €1.05 in May 2026, partly offset by a small 40k-share sale at €1.00 in September 2025.
The management incentive structure is primarily built around operational execution rather than market-based share-price targets. For 2025, 60% of the annual MBO (Management by Objectives) for both the CEO and CFO is tied to financial KPIs: Group EBITDA, Group net working capital control, Emak OPE EBITDA, and Emak OPE net working capital control. The weighting implies a clear focus on profitability and cash discipline, with 36 percentage points linked to group-level performance and 24 percentage points to the core OPE business. The plan also includes an entry gate: at least 80% of budgeted EBITDA must be achieved for the MBO to activate, although up to 40% can still be paid if specific non-financial objectives are met.
The remaining 40% of the annual incentive is linked to strategic and sustainability-related objectives, including product development, succession planning, zero-emission or lower-impact R&D projects, AEO certification, and gender-equality certification initiatives. The three-year LTI is broader and more explicitly value-oriented, based on value creation over the mandate period, measured through an Equity Value framework using an EBITDA multiple adjusted for net financial position and extraordinary items.
Back-of-the-Envelope Acid Test - Any “Juice” on the Upside?
This is a high-level test of normalization scenarios as well as looking into M&A multiples within the sector. There is, of course, a wide distribution of potential outcomes around these assumptions. The purpose is to quickly test whether the current share price leaves room for material upside under a reasonable normalization case, likely or not likely.
Earnings and Sales Perspective
There is one analyst following EM and the price target is currently €1.50. The “consensus estimate” for sales during the coming years are -1.2% (FY26), +2.5% (FY27) and +2.4% (FY28), bringing FY28 sales to €635m. They expect EBITDA margins to gradually strengthen: 11.2% (FY26), 11.6% (FY27) and 11.8% (FY28), taking FY28 EBITDA to €75m. If capex is in line with D&A, WC levels normalize and the payout ratio is 30%, EM might close FY28 with net debt of €87m (34% net gearing).
If Mr. Market is in more of an average state of mind by 2029, and values EM at 5x EV/EBITDA (10y median is 5.9x), we get an EV of €375m and an equity value of €288m, or €1.77 per share. If we add accumulated dividends of €0.15 per share, we get €1.92 per share - an upside of 113% and a potential CAGR of 29%.
Asset Perspective
If the above P&L scenario plays out, TB per share will increase from €1.23 to €1.58 by FY28. At 1x TB (the 10y median is 1.22) that is a stock price of €1.58 and adjusted for accumulated dividends €1.73 – an upside of 92% or a potential CAGR of 24%.
A Buyout by the Family
This is a latent option that’s present in many of the European deep value-cases. This was recently actualized in the “deep value colleague” Installux (ALLUX) where the family which for a long time has had an ownership of c. 67% just recently made a bid for all shares at a premium of c. 74% (1.2x TB and c. 5.75x EBITDA). It is nothing to expect, but for sure there must be a valuation level where it starts to get tempting in the Yama board room – however, given that their holding is starting to get more and more spread within the families, they likely see a lot of positives with being a listed company.
SOTP Perspective
There is likely a SOTP potential in EM since this is, operationally, a well-spread group that has been acquired, piece by piece, over the years. However, just for that reason, it is probably very unlikely that the family would start to dismantle the group and sell it off on a piece-by-piece basis. They are acquirers and – perhaps at least to some degree – empire builders and have shown no signs of “asset stripping” behavior.
Given the breadth of the group, there is likely also a “Badco / Goodco” component. For example, the Components & Accessories segment has 53% of the 2025 EBIT whilst only using c. 29% of the group’s capital employed. And on the other side, the Outdoor Power Equipment segment only stands for c. 12% of the 2025 EBIT whilst using c. 42% of the group’s capital employed.
At subsidiary level, the main candidates for “Goodcos” are Comet S.p.A. and Tecomec S.r.l.. In Emak S.p.A.’s separate accounts, Comet had €54.2m equity and €8.6m net profit, while Tecomec had €42.8m equity and €8.1m net profit. Remember, total group net profit for 2025 was €14.5m.
Potential Paths to Value Realization - Illustrative capital allocation scenarios rather than base-case expectations
Sale-and-Leaseback(s)
With several wholly owned plants the company does likely have the option to pursue sale-and-leasebacks. Again, this is not something we expect, but it gives them an extra cash lever to pull (which likely also would increase the equity) should they be in need of strengthening the balance sheet.
As a theoretical exercise, should they be able to do sale-and-leasebacks of all owned properties at their cost level (likely conservative), that would lead to a cash injection (pre transaction costs / taxes) of €62.5m, taking the company to a net debt position of, say, c. +-€139m (71% net gearing) after taxes / transaction costs.
Summary
EM is one of those decent although cyclical deep value companies. The industry is mature and consolidated where a degree of equilibrium has been established over time, and most participants can generate modest profits. But when the whole pie shrinks, pricing pressure increases and profit decreases. The valuation is now statistically low, amid a somewhat uncertain outlook.
The parts of the group trace back 50+ years and this structure has proven itself for soon 40 years. However, an investor who bought the stock in 2018 and still holds it has received a CAGR of -3.6% (incl. dividends). A weak consensus should not per se deter from being contrarian, but Mr. Market likely needs to get more negative for EM to offer a very attractive risk:reward proposition for the next few years. The stock has not reached absurd levels, nor unique levels - the stock has traded lower on 12% of the trading days since late 2012. Sometimes being patient is the most fruitful activity.
This write-up is the 17th one in our net-net and deep value series where we aim to take a brief look at all “quality” net-nets / P/TB cases on the Western markets. Seventeen done, one thousand to go.
Further reading
Intermonte (Equity Research #2)
This publication is not investment advice. The author does not own any shares in Emak. The author was not compensated for this write-up and is not claiming to be an investment advisor. The opinions expressed are solely those of the author. The information herein is based on publicly available sources believed to be reliable but has not been independently verified. All opinions are subject to change without notice. Readers should conduct their own due diligence and consult a licensed financial advisor before making any investment decisions.
Nice write-up.