CAG Group

CAG Group is a Swedish IT consulting firm specializing in system development, IT security, and digital transformation, with a diversified client base and strong presence in the defense sector. Founded in 2005 and headquartered in Stockholm, CAG operates through 10 subsidiaries, including CAG Novus and CAG Security, enabling a specialist-focused, scalable business model. The company’s growth strategy is driven by acquisitions, long-term framework agreements with key customers such as FMV and BAE Systems, and exposure to structural trends in defense modernization, cybersecurity, and AI adoption.

Financially, CAG demonstrates steady performance with five-year annual revenue growth of 12.9% and profit growth of 13.6%, supported by a 5.8% operating margin, net cash position, and 3.6% dividend yield. Over 50% of revenue is considered non-cyclical, reducing typical risks for consulting firms, while the balance sheet strength supports continued M&A.

Key risks include dependence on public sector contracts, competitive pressure from larger players, potential acquisition integration issues, and sector cyclicality in non-defense segments. Increased exposure to the IT consulting sector in a broader portfolio context may also raise concentration risk.

Valuation analysis versus Nordic peers shows CAG trading at a discount on key multiples, despite comparable operational metrics. With a target price of SEK 153/share, implying a 40% upside from SEK 110, the stock is considered undervalued. Given its stable financial profile, growth drivers, and sector positioning, the recommendation is Buy.