The Hottest Investment in Wellness

Current Price: €42.4 | Helsinki: HARVIA

Many of you asked in the Sprint Club if they can buy Harvia on the NYSE, the answer is no. Only on European exchanges. Harvia PLC is the world's largest sauna and spa manufacturer by revenue, commanding over 20% of the global sauna heater market and roughly 5% of the broader €3.5 billion sauna industry. At €42.4 per share, the stock trades at a forward P/E of 24x, implying ~15% annual earnings growth—achievable but already baked into the price. The company returned to double-digit growth in 2024 after a two-year post-pandemic correction, with Q1 2025 revenue up 22.7% and a strong balance sheet (1.4x leverage) providing M&A firepower. Harvia's moats are widening through scale advantages and strategic acquisitions, but the valuation offers limited margin of safety. This is a quality compounder priced for continued excellence rather than a bargain opportunity.

From Finnish Heater Maker to Global Wellness Platform

Founded in 1950 by Tapani Harvia in Muurame, Finland, Harvia has transformed from a wood-burning heater manufacturer into a vertically integrated global platform spanning saunas, steam rooms, hot tubs, and wellness accessories. The company listed on Nasdaq Helsinki in March 2018 and has delivered 10x stock appreciation since IPO, driven by both organic growth and strategic acquisitions.

Today Harvia operates 10 production facilities across Finland, Germany, the United States, Romania, China, Estonia, and Austria, selling products in approximately 90 countries. Revenue has more than doubled since IPO, reaching €175.2 million in 2024. The company employs around 600 people globally and operates a multi-brand portfolio including the premium German brand EOS (acquired 2020), Almost Heaven Saunas (U.S. outdoor saunas), Kirami (Finnish hot tubs), and most recently ThermaSol (U.S. steam systems, acquired July 2024 for $30.4 million).

Geographic revenue breakdown reveals a strategic shift toward North America, which now represents 35.4% of sales (up from ~25% at IPO), followed by Continental Europe at 30.1% and Northern Europe at 25.0%. This diversification has been deliberate—management exited Russia in 2022 (6.4% of revenue at the time) and has aggressively pursued the underpenetrated U.S. market, where only ~1 million saunas serve 330 million people compared to Finland's 3 million saunas for 5.5 million people.

Why Competitors Can't Turn Up the Heat

Harvia's competitive advantages cluster around manufacturing scale, distribution density, and brand heritage—a combination that is difficult for competitors to replicate quickly. The company operates the world's largest sauna heater factory in Muurame, Finland, producing over 300 different heater models with significant automation and economies of scale.

Manufacturing scale provides tangible cost advantages. Approximately 70% of U.S.-bound products are manufactured locally in West Virginia and Texas, insulating the company from tariff risks while competitors import from Europe or Asia. The 2021 acquisition of an 8,900 m² facility in Lewisburg, West Virginia increased capacity by roughly 33%, and management has continued acquiring adjacent land for future expansion.

Distribution network density creates durable relationships. Harvia sells through diverse channels including B2B distributors, specialty retailers, DIY chains (Costco, Home Depot in the U.S.), and direct-to-consumer e-commerce. The ThermaSol acquisition added a nationwide plumbing wholesaler network for steam products—a channel Harvia previously couldn't access.

Brand strength provides pricing power. Harvia is described as "one of the most often recognized international sauna brands" with 75 years of Finnish heritage—critical in an industry where Finnish authenticity commands premium positioning. The multi-brand architecture (Harvia for mainstream, EOS for premium German customers, Almost Heaven for U.S. outdoor enthusiasts) allows market segmentation without diluting brand equity.

The moat trajectory is clearly widening. Since 2020, Harvia has completed five acquisitions expanding into adjacent categories (hot tubs, steam, infrared) and geographies (U.S., Japan). Management explicitly describes itself as an "active consolidator" with M&A remaining a core pillar of strategy.

The Balance Sheet Won't Make You Sweat

Harvia's balance sheet supports both continued acquisitions and shareholder returns. Net debt stood at €62.1 million as of Q3 2025, representing 1.4x Net Debt/EBITDA—well below the company's self-imposed ceiling of 2.5x. This conservative positioning is intentional, preserving flexibility for opportunistic M&A while maintaining financial resilience through economic cycles.

The leverage increase in 2024-2025 reflects the ThermaSol acquisition ($30.4 million), not operational deterioration. Management has demonstrated disciplined capital allocation, paying reasonable multiples for acquisitions (ThermaSol was acquired at 2.1x sales and 12.2x EBITDA—below Harvia's own trading multiples).

Return on capital significantly exceeds cost of capital. Harvia generates ROE of approximately 21% and Return on Invested Capital around 20-21%, substantially above a typical WACC of 8-10%. This spread indicates genuine economic value creation rather than financial engineering.

Earnings Are Heating Up Again

Earnings per share collapsed from €1.79 in 2021 to €1.24 in 2023 as pandemic-driven demand reversed and inflationary pressures hit European consumers. However, 2024 marked the inflection point—EPS grew 4.8% to €1.30, and 2025 is showing meaningful acceleration.

Q1 2025 delivered strong earnings momentum with EPS of €0.45, up approximately 13% year-over-year. North America drove the outperformance with Q4 2024 regional sales surging 50% YoY and Q1 2025 organic growth of 14%. Analyst consensus expects €1.45 EPS for full-year 2025 and €1.77 for 2026, representing a two-year earnings CAGR of approximately 17%.

Net margins have compressed but remain healthy. The net margin fell from a peak of 18.8% in 2021 to 13.8% in 2024, reflecting growth investments (sales expansion, digital capabilities, marketing), acquisition integration costs, and some promotional pricing pressure. Importantly, gross margin remains strong at 64.9%, indicating pricing power is intact.

Dividends Keep Rising Like Steam

Harvia's capital allocation framework prioritizes growth while maintaining a credible dividend growth track record. The company retains approximately 45% of earnings for reinvestment while distributing 55% through dividends.

Harvia has increased its dividend for seven consecutive years, with the 2024 dividend of €0.75 per share representing 10.3% year-over-year growth. The five-year dividend CAGR is approximately 14.6%. At €42.4, the current yield is a modest 1.78%, but the growth trajectory is compelling for long-term compounding.

Reinvestment supports organic and inorganic growth. Capital expenditure is elevated at €12.6 million (trailing twelve months) compared to depreciation of approximately €5.8 million, reflecting capacity expansion investments in Germany and the U.S.

Is the Price Too Hot to Handle?

At €42.4 per share, Harvia trades at a trailing P/E of 32.8x and forward P/E of 24.2x, representing a meaningful premium to the broader European industrial sector. Enterprise value is €853 million at EV/EBITDA of 19.5x.

Reverse DCF analysis reveals the stock is priced for ~15% annual earnings growth over the next five years—above the company's stated 10% revenue growth target but achievable given recent performance (2024-2025 organic growth running 14-17%). The intrinsic value based on conservative DCF assumptions suggests €34.57 base case, approximately 18% below current price.

Analyst consensus price targets cluster around €41-43, implying the stock is fairly valued at current levels.

Growth Drivers and the Cold Reality of Risk

North America represents the primary growth engine. The U.S. sauna market is approximately $800 million and growing 5% annually, with penetration vastly below Nordic levels. Harvia's local manufacturing footprint, retail partnerships (Costco, Home Depot), and ThermaSol distribution network position the company to capture market share.

The wellness megatrend provides secular tailwinds. Health influencers (Peter Attia, Andrew Huberman) have elevated sauna visibility, while scientific evidence on cardiovascular and longevity benefits strengthens the value proposition.

However, demand cyclicality is the primary risk. Saunas are consumer discretionary purchases ($5,000-$50,000+), and Harvia experienced significant revenue declines in 2022-2023 (-7.7% and -9.4% organic growth respectively) when European consumer confidence collapsed.

Competition is intensifying. KLAFS was acquired by Kohler in January 2024, and TyloHelo was acquired by Masco Corporation in August 2023. These transactions signal strategic buyers view the sauna market as attractive.

The Scorecard

Overall Score: 64/100

Verdict: Quality compounder at a fair price.

Harvia is a well-managed market leader with real competitive advantages, exceptional unit economics, and margins 3x higher than competitors. The 20%+ ROIC, widening moats through M&A, and North American growth runway make this a business worth owning. The discretionary nature of saunas (score of 3) remains the key vulnerability, but the structural margin advantage and reasonable valuation for quality offset this concern.

At €42.4, you're paying a fair price for a quality compounder. For investors with a long-term horizon, this is a solid accumulate candidate—not a screaming bargain, but a business that rewards patient ownership. Right now I own shares of Harvia, and am watching 12 companies on my watchlist, which you can access in real-time in our community.

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