SpareBank 1 Nord-Norge (OB:NONG): Assessing Valuation After Q3 Results Show Record Retail Growth, Lower Profit

SpareBank 1 Nord-Norge (OB:NONG) just released its third quarter results, drawing attention for record-high retail growth and steady corporate gains despite industry challenges. Investors are weighing the impact of lower profit as well as the continued commitment to dividends.

See our latest analysis for SpareBank 1 Nord-Norge.

SpareBank 1 Nord-Norge’s recent third quarter results come after a year marked by record retail growth and ongoing commitment to dividends, with the latest share price moving slightly lower to NOK 137.5. While short-term share price returns have dipped, the longer-term total shareholder return stands out, up an impressive 27% over the past year and nearly tripling over five years. This highlights solid momentum and renewed investor confidence despite short-term profit headwinds.

If you’re looking to expand your horizons beyond the banking sector, now’s a great moment to discover fast growing stocks with high insider ownership.

The question now is whether SpareBank 1 Nord-Norge’s recent slide has uncovered value for new investors, or if the bank’s strong fundamentals are already fully reflected in the current share price.

Price-to-Earnings of 8.8x: Is it justified?

At SpareBank 1 Nord-Norge’s last close of NOK 137.5, the stock is trading at a price-to-earnings (P/E) ratio of 8.8x. This level looks attractive compared to both Norwegian bank peers and the broader market, suggesting the shares may be underappreciated based on current earnings power.

The P/E ratio is a key valuation benchmark, showing how much investors are willing to pay for every NOK of the company’s earnings. For banks, it reflects market expectations about steady profits and potential growth in a regulated but competitive sector. Lower ratios can signal undervaluation if fundamentals remain solid.

SpareBank 1 Nord-Norge’s P/E sits below its industry average (10.7x) and below its own estimated fair P/E (11.7x). This highlights potential upside if the market rerates the stock closer to fair value. Both peers and regression-based analysis point to room for the market to revalue the bank if performance remains robust.

Explore the SWS fair ratio for SpareBank 1 Nord-Norge

Result: Price-to-Earnings of 8.8x (UNDERVALUED)

However, slower annual revenue growth and recent share price declines could challenge the positive momentum. This could potentially weigh on further upside in the near term.

Find out about the key risks to this SpareBank 1 Nord-Norge narrative.

Another View: SWS DCF Model Signals Even More Upside

For a different perspective, our SWS DCF model estimates SpareBank 1 Nord-Norge's fair value at NOK 244.15. This is significantly above the current share price of NOK 137.5, suggesting a much deeper undervaluation than what the P/E ratio alone indicates. Could this create a real opportunity, or is the market pricing in unseen risks?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out SpareBank 1 Nord-Norge for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 833 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own SpareBank 1 Nord-Norge Narrative

If you’d rather reach your own conclusion or want to dig deeper into the numbers, you can build your personal view in just a few minutes. Do it your way.

A great starting point for your SpareBank 1 Nord-Norge research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. 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. 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.

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