Is Komplett Bank ASA’s (OB:KOMP) Stock Available For A Good Price After Accounting For Growth?

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Komplett Bank ASA (OB:KOMP) is a stock well-positioned for future growth, but many investors are wondering whether its last closing price of NOK12.42 is based on unrealistic expectations. Let’s look into this by assessing KOMP’s expected growth over the next few years.

Check out our latest analysis for Komplett Bank

What can we expect from KOMP in the future?

Komplett Bank is poised for significantly high earnings growth in the near future. Analyst expectations are extremely positive with earnings forecasted to rise significantly from today’s level of NOK1.934 to NOK3.221 over the next three years. This results in an annual growth rate of 20%, on average, which illustrates a highly optimistic outlook in the near term.

Is KOMP available at a good price after accounting for its growth?

Komplett Bank is available at a price-to-earnings ratio of 6.42x, showing us it is undervalued relative to the current NO market average of 12.8x , and undervalued based on its latest annual earnings update compared to the Banks average of 8.93x .

OB:KOMP Price Estimation Relative to Market, May 13th 2019
OB:KOMP Price Estimation Relative to Market, May 13th 2019

We already know that KOMP appears to be undervalued based on its PE ratio, compared to the industry average. However, seeing as Komplett Bank is perceived as a high-growth stock, we must also account for its earnings growth, which is captured in the PEG ratio. A PE ratio of 6.42x and expected year-on-year earnings growth of 20% give Komplett Bank an extremely low PEG ratio of 0.33x. So, when we include the growth factor in our analysis, Komplett Bank appears relatively cheap , based on the fundamentals.

What this means for you:

KOMP’s current undervaluation could signal a potential buying opportunity to increase your exposure to the stock, or it you’re a potential investor, now may be the right time to buy. However, basing your investment decision off one metric alone is certainly not sufficient. There are many things I have not taken into account in this article and the PEG ratio is very one-dimensional. If you have not done so already, I urge you to complete your research by taking a look at the following:

  1. Financial Health: Are KOMP’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  2. Valuation: What is KOMP worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether KOMP is currently mispriced by the market.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.