A Hidden Nordic Giant Powering the Future of Defense and Technology
Growth stock with a 5 year dividend CAGR of 32% AND annual special dividends
In an era of rising global tensions and rapid technological advancements, a Nordic powerhouse has been quietly securing its place at the forefront of defense, maritime, and digital innovation. With a history spanning over two centuries, this company has evolved from its humble beginnings into a critical supplier for governments and industries worldwide.
As geopolitical shifts drive demand for cutting-edge solutions, this hidden gem is poised for remarkable growth. Could this be the under-the-radar opportunity savvy investors have been waiting for?
Annual dividend hikes (without annual specials!):
2025: +42.9%
2024: +94.4%
2023: +9.1%
2022: +10%
2021: +20%
The best part: This stock just announced a 40%+ dividend hike for 2024 bringing the 5 year CAGR to a whopping 32%. Even better: A special dividend was announced on top of this big dividend hike; this is the 6th consecutive annual special dividend by our new Focus Stock from Europe. And last but not least: this is a debt free company…….
If you examine the dividend statistics for Norway’s Kongsberg Gruppen ASA, it’s no surprise that the stock has posted double-digit gains each of the past six years. This includes a staggering 175% surge in 2024, driven by increased defense spending from European governments—benefiting major defense firms like Rheinmetall (Germany), Thales (France), and Saab (Sweden).
Kongsberg remains one of the sector’s lesser-known but top-performing players. With this sharp rise in stock price, the company now boasts a hefty market cap of $19 billion (NOK 213 billion) at a share price of NOK 1155.
History
Kongsberg Gruppen ASA was founded in 1814 as Kongsberg VÃ¥penfabrikk, initially operating as a weapons manufacturer. Over the years, the company evolved into an international technology conglomerate active in the maritime, defense, digital, and aerospace sectors. In the 1960s and 1970s, Kongsberg expanded into the maritime and oil and gas industries, introducing innovations such as dynamic positioning systems and subsea installations. The company underwent restructuring in the 1990s and grew into a key player in technology-driven industries.
Organizational Structure and Sectors
Kongsberg Gruppen is organized into four main segments:
Kongsberg Maritime: Develops and delivers advanced technologies for sustainable and efficient maritime operations, including navigation, automation, and surveillance systems for shipping and offshore industries.
Kongsberg Defence & Aerospace: Provides defense systems and aerospace solutions, including missile systems, weapon systems, and electronic warfare systems.
Kongsberg Digital: Focuses on digitalization and data-driven solutions within the oil and gas industry, wind energy, and commercial shipping.
Kongsberg Discovery: Specializes in underwater technology, such as autonomous vehicles and advanced sonar systems.
Key Products
Kongsberg offers a wide range of advanced products and systems:
Protector Remote Weapon Station (RWS): A remotely operated weapon system mounted on vehicles and stationary platforms, used by armed forces worldwide.
Naval Strike Missile (NSM): An advanced long-range missile system for naval and land targets, adopted by several NATO countries.
Joint Strike Missile (JSM): Designed for integration into F-35 fighter jets.
Dynamic Positioning Systems: Systems that enable vessels to maintain precise positioning without anchors.
Autonomous Underwater Vehicles (AUVs): Advanced robots for underwater exploration and monitoring.
Space Technology: Kongsberg provides components and systems for satellites and space programs.
Competition and Market Position
In the defense sector, Kongsberg competes with companies such as Sweden's Saab, the UK's BAE Systems, France's Thales, and Italy's Leonardo. In the maritime sector, it faces competition from companies like Wärtsilä and Rolls-Royce Marine. However, Kongsberg holds a strong position due to its long history of technological innovation and close partnerships with governments and industrial partners worldwide.
Success Factors and Competitive Advantage
Kongsberg's recent growth is primarily attributed to:
Increased Demand for Defense Products: Geopolitical tensions and rising defense budgets in Europe and the U.S. have driven demand for Kongsberg's missile and weapons technology.
Innovation and Technological Leadership: Continuous investments in research and development keep Kongsberg at the forefront of advanced technologies.
Diversification Across Sectors: Presence in the defense, maritime, and digital sectors ensures stable revenue streams even in times of economic uncertainty.
Strong Partnerships: Kongsberg collaborates with major military and commercial clients, including NATO countries and international maritime companies.
Recent earnings and outlook
On february 7, 2025, Kongsberg reported Q4 of 2024 results. Kongsberg's Q4 results showed strong performance with operating revenues of MNOK 13,909, reflecting a 17% growth from Q4 2023. All business areas contributed to this growth, with positive increases in both EBIT and EBIT margin due to efficient project execution. The Board of Directors proposed a total dividend for 2024 of NOK 3.87 billion (NOK 22 per share), including an additional NOK 12 per share beyond the ordinary dividend policy, to be paid in two installments. A five-for-one stock split is also proposed for June 2025.
Kongsberg Defence & Aerospace secured significant orders, ending the year with a NOK 100 billion order backlog, while Kongsberg Maritime reported strong order intake and a book-to-bill ratio of 1.33. Kongsberg Digital's maritime operations will be integrated into Kongsberg Maritime, and Kongsberg Discovery acquired Naxys Technologies.
The company's order intake for 2024 reached nearly NOK 90 billion, and it enters 2025 with an order backlog of NOK 128 billion, a 44% increase from the previous year. Kongsberg aims to reach at least NOK 120 billion in revenue by 2033. CEO Geir Håøy highlighted strong market positions, growth, and high demand for Kongsberg's products and services, emphasizing the company's readiness to adapt and balance short- and long-term value creation.
Dividend & Buybacks
Kongsberg just announced total dividend of NOK 22 per share for 2024: a regular payment of NOK 10 (up from NOK 7 last year) with a special dividend of NOK 12 (up from NOK 7 last year). This translates into a 1.9% yield at a current stock price of NOK 1,152 for Kongsberg Gruppen.
According to our calculations, the company has now raised the dividend for the fifth consecutive year with a total increase of 300% over that period with four double digit hikes in the last four years. Kongsberg also pays annual special dividends and buys back between 0,2% and 1,0% of its own shares annually.
The company’s dividend policy says:
KONGSBERG seeks to pay an ordinary dividend per share that is stable or growing year over year. Special dividends and/or share buybacks may serve as a supplement to ordinary dividends.
With a war chest of NOK 9,6 billion and strong free cash flow future dividend growth and buybacks are looking good.
Financial Metrics & Analyst opinions
Based on current analyst estimates, Kongsberg is expected to trade at a P/E ratio of nearly 34 for 2025, indicating a strong valuation with limited room for failure. However, the company boasts a high ROIC of 36.5% for 2024, which is projected to rise to over 45% in the coming years, alongside a 13-14% annual EBIT margin. After a 20.3% revenue growth in 2025, reaching NOK 48.9 billion, analysts forecast average revenue growth of 15.5%, bringing it to NOK 56.5 billion for 2025. Kongsberg also maintains a strong balance sheet with a net cash position of NOK 9.6 billion at the end of 2024.
Kongsberg Gruppen Key Figures:
Estimated P/E ratio for 2025: ~34
ROIC for 2024: 36.5%, expected to exceed 45% in the next few years
EBIT margin: 13-14% annually
Revenue growth in 2024: +20.3% to NOK 48.9 billion
Average 2025 revenue forecast: +15.5% to NOK 56.5 billion
Net cash position at end of 2024: NOK 9.6 billion
Analysts are becoming more cautious about the stock following its strong performance in recent years. Currently, three analysts rate Kongsberg as a "buy" (1 strong buy, 2 buys), while four analysts recommend a "hold," and two analysts suggest a "sell." The average stock price target is NOK 1,242, which is slightly above the current market price of NOK 1,153, indicating limited upside based on the analyst consensus. This week, following Kongsberg's earnings report, regional analysts from Pareto downgraded the stock from "buy" to "hold" with a price target of NOK 1,250, while analysts from Carnegie lowered their target price from NOK 1,415 to NOK 1,301.
Conclusion
Kongsberg Gruppen ASA has established itself as a versatile and innovative technology company with a strong market position in defense, maritime, and digital technologies. With a diverse portfolio of advanced products and a strategic focus on innovation and sustainability, the company remains a key player in both the Norwegian and international markets.
However, the valuation is high, and the stock price has surged significantly over the past six years, delivering double-digit annual gains and an impressive 175% increase in 2024 alone. Considering that the stock has gained 940% over the past decade, far outpacing dividend growth, it is understandable that analysts are cautious, with an average recommendation of ‘hold’ and a price target only slightly above the current level.
Disclaimer: The information provided here is for informational purposes only and should not be considered financial advice. Investors should conduct their own research or consult with a financial advisor before making any investment decisions.
Kongsberg is up 68% now since we did this article!
Kongsberg completed its 5-for-1 stock split this week.
This means the current share price is NOK 365. Adjusted for the split, this was our Focus Stock at NOK 230 — delivering a return of 58% since our recommendation on February 10th this year.
And that’s not even including dividends!
Not bad at all!