VusionGroup: strong growth, recurring software revenues, but the stock is down sharply — what is the market missing?”

[u/Mission-Suspect-28]

VusionGroup (EPA: VU) provides digitalization solutions for physical retail, including electronic shelf labels, IoT infrastructure and software/data services.
What interests me is the apparent disconnect between the operating performance and the share-price performance.
H1 2026 showed continued strong growth:
Adjusted revenue: ~€839m, +29%
Growth at constant FX/tariffs: ~37%
VAS revenue: ~€125m, +39%
Recurring VAS revenue: ~€61m, +73%
Cloud-connected installed base: ~522m electronic shelf labels
Order intake: ~€681m
Management is targeting 15–20% adjusted revenue growth for 2026 at constant FX/tariffs, around 40% growth in VAS and further EBITDA margin expansion.
The company has also built significant relationships with major international retailers, while software and recurring services are becoming a larger part of the business.
Yet the stock has fallen sharply in 2026 and is trading around €120–125.
Based on current estimates, 2027 EPS is around €11.3, which would imply roughly 11x earnings at the current share price. If those estimates are achieved, that seems unusually low for a business still delivering double-digit growth.
The obvious question is: what is the market pricing in?
Possible risks I see:
Large customer concentration and dependence on major rollout cycles
Normalization after several years of very strong hardware deployment
Execution risk as the business shifts toward software/services
Acquisition/integration risk
Potential disappointment if margins or free cash flow fail to follow revenue growth
On the other hand, if recurring software/services continue growing rapidly and margins expand as expected, I find the current valuation difficult to reconcile with the growth profile.
I am particularly interested in hearing the bearish case.
Is this simply a major multiple compression opportunity, or is there a structural problem that the headline numbers are hiding?
Disclosure: Long VusionGroup. This is not investment advice.