<div id="readability-page-1"><div><p>Lenovo Group (SEHK:992) has just posted its Q3 2026 numbers, with revenue of about US$22.2 billion and basic EPS of US$0.044, backed by net income of US$545.5 million. The company has seen quarterly revenue move from US$16.98 billion in Q4 2025 to US$18.83 billion in Q1 2026, US$20.45 billion in Q2 2026, and now US$22.20 billion in Q3 2026. Over the same stretch, EPS has ranged between US$0.007 and US$0.056 and sits at US$0.044 this quarter, highlighting a story that is as much about the shape of margins as it is about top line scale.</p> <p>See our full analysis for Lenovo Group.</p><p>With the headline numbers on the table, the next step is to set them against the widely followed narratives around Lenovo’s growth, margins and payout profile to see which stories hold up and which need a rethink.</p> <p>See what the community is saying about Lenovo Group</p> <figure><img height="476" src="https://imageproxy.pbkrs.com/https://images.simplywall.st/company/8e79d8f0-d93b-4aca-ac7c-c49ceb94df0e/chart/revenue-and-expenses-breakdown?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="746" original-src="https://imageproxy.pbkrs.com/https://images.simplywall.st/company/8e79d8f0-d93b-4aca-ac7c-c49ceb94df0e/chart/revenue-and-expenses-breakdown"/><figcaption>SEHK:992 Revenue &amp; Expenses Breakdown as at Feb 2026</figcaption></figure> <h2>Net margin sits at about 2% on US$78.5b LTM sales</h2> <ul> <li>Over the last twelve months, Lenovo booked about US$78.5b of revenue and US$1.5b of net income, which works out to a net margin of 1.9%, compared with 2.3% a year earlier in the data provided.</li> <li>Consensus narrative points to higher margin potential from services and AI, yet the reported 1.9% margin shows that, so far, profitability is still tight:     <ul> <li>Analysts expect earnings to grow faster than revenue, with forecast earnings growth of about 9.8% per year versus 5.9% for revenue. This implies some lift in margins over time.</li> <li>Against that, the five year record in the summary shows earnings declining by about 2% per year and the latest margin dipping from 2.3% to 1.9%. As a result, the recent history is still more in line with the cautious parts of the consensus story than the margin improvement idea.</li> </ul> </li> </ul> <h2>Quarterly profit climbs to US$545m, backing the bullish AI story</h2> <ul> <li>In Q3 2026, net income reached US$545.5m on US$22.2b of revenue, up from US$340.3m in Q2 2026 and US$89.9m in Q4 2025, while basic EPS moved within a band of roughly US$0.007 to US$0.056 across the last six quarters and came in at US$0.044 this time.</li> <li>Bulls argue that AI driven devices and infrastructure can push Lenovo into higher margin, higher profit territory, and the latest profit line gives some support but also shows the work still to do:     <ul> <li>The bullish narrative talks about earnings reaching US$2.7b and margins rising from 2.0% to 2.5% by around 2028, compared with about US$1.5b of LTM earnings and a 1.9% margin today. The current numbers are still well below those bullish end points even after this quarter's profit.</li> <li>At the same time, the series from Q4 2025 to Q3 2026 in the data shows net income moving from under US$100m to over US$500m, which bullish investors may see as early evidence that higher margin segments like solutions and AI infrastructure are starting to show up in the group profit line.</li> </ul> </li> </ul><p> Bulls argue this Q3 profit run rate could be a stepping stone toward their higher 2028 earnings goals, but the margin gap they need to close is still clear in the numbers. <strong>🐂 Lenovo Group Bull Case</strong></p><h2>HK$9.26 share price versus 9.9x P/E and DCF fair value of HK$27.22</h2> <ul> <li>The stock trades at HK$9.26 with a trailing P/E of 9.9x, compared with a peer average of 36.9x and an Asian Tech industry average of 22x. It also comes with a 4.21% dividend yield over the last year according to the summary.</li> <li>Bears focus on pressure in earnings and margins to argue this discount could be justified, and the data shows why they lean that way:     <ul> <li>The five year record referenced in the analysis has earnings declining by about 2% per year and the latest one year net margin moving from 2.3% to 1.9%. This fits the bearish idea that Lenovo's hardware heavy mix keeps group profitability contained.</li> <li>Even though the DCF fair value in the summary sits at HK$27.22, well above HK$9.26, the bearish narrative points to factors like reliance on traditional devices, rising input costs, and exposure to tariffs as reasons why softer margins and slower forecast growth of 5.9% for revenue and 9.8% for earnings might tie the share price closer to current levels than that higher modelled value.</li> </ul> </li> </ul><p> Skeptics point to the margin drift and five year earnings trend as reasons the market keeps Lenovo at a low P/E despite the DCF fair value gap. <strong>🐻 Lenovo Group Bear Case</strong></p><h2> Next Steps</h2> <p>To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Lenovo Group on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.</p> <p>See the numbers differently? If the data points tell you a different story, shape that view into your own narrative in just a few minutes: Do it your way</p> <p>A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Lenovo Group.</p> <h2>See What Else Is Out There</h2> <p>Lenovo's 1.9% net margin, five year earnings decline, and pressure on profitability suggest that relying solely on this hardware heavy story could limit your upside.</p> <p>If tight margins and earnings pressure worry you, widen your search to companies that pair quality with more appealing valuations by checking out 232 high quality undervalued stocks today.</p> <p><em> This article by Simply Wall St is general in nature. <strong>We provide commentary based on historical data     and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice.</strong> It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your     financial situation. We aim to bring you long-term focused analysis driven by fundamental data.     Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.     Simply Wall St has no position in any stocks mentioned.</em></p><div><h3><strong>New: </strong>AI Stock Screener &amp; Alerts</h3><p>Our new AI Stock Screener scans the market every day to uncover opportunities.</p><div><p>• Dividend Powerhouses (3%+ Yield)<br/>• Undervalued Small Caps with Insider Buying<br/>• High growth Tech and AI Companies</p><p>Or build your own from over 50 metrics.</p></div><p>Explore Now for Free</p></div></div></div>

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<p>Lenovo Group (SEHK:992) reported Q3 2026 revenue of US$22.2 billion and net income of US$545.5 million, with EPS at US$0.044. Despite a quarterly revenue increase, net margin fell to 1.9% from 2.3% a year earlier. Analysts predict earnings growth of 9.8% annually, but recent trends show a decline in earnings. The stock trades at HK$9.26 with a P/E of 9.9x, significantly lower than peers, raising concerns about profitability due to reliance on traditional devices and rising costs. Bulls see potential in AI-driven growth, while bears highlight margin pressures.</p>

Lenovo Group (SEHK:992) Q3 Profit Jump Tests Bullish AI Margin Narrative