SpareBank 1 Nord-Norge (OB:NONG): Can Growth Justify Its June Share Price?

SpareBank 1 Nord-Norge (OB:NONG) is considered a high growth stock. However its last closing price of NOK56.9 left investors wondering whether this growth has already been factored into the share price. Let’s look into this by assessing NONG’s expected growth over the next few years. View out our latest analysis for SpareBank 1 Nord-Norge

Has the NONG train has slowed down?

Analysts are predicting good growth prospects for SpareBank 1 Nord-Norge over the next couple of years. The consensus forecast from 6 analysts is bullish with earnings per share estimated to rise from today’s level of NOK6.63 to NOK6.964 over the next three years. This results in an annual growth rate of 11.39%, on average, which indicates a solid future in the near term.

Is NONG’s share price justified by its earnings growth?

SpareBank 1 Nord-Norge is trading at quite low price-to-earnings (PE) ratio of 8.58x. This tells us the stock is undervalued relative to the current NO market average of 13.31x , and undervalued based on its latest annual earnings update compared to the banks average of 8.82x .

OB:NONG PE PEG Gauge June 21st 18
OB:NONG PE PEG Gauge June 21st 18

We already know that NONG appears to be undervalued based on its PE ratio, compared to the industry average. But, to properly examine the value of a high-growth stock such as SpareBank 1 Nord-Norge, we must reflect its earnings growth into the valuation. I find that the PEG ratio is simple yet effective for this exercise. A PE ratio of 8.58x and expected year-on-year earnings growth of 11.39% give SpareBank 1 Nord-Norge a very low PEG ratio of 0.75x. So, when we include the growth factor in our analysis, SpareBank 1 Nord-Norge appears relatively cheap , based on its fundamentals.

What this means for you:

NONG’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: Is NONG’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. Past Track Record: Has NONG been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of NONG’s historicals for more clarity.
  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.