Pareto Bank ASA (OB:PARB): Poised For Long-Term Success?

Pareto Bank ASA’s (OB:PARB) latest earnings announcement in December 2017 revealed that the company benefited from a strong tailwind, eventuating to a double-digit earnings growth of 26.40%. Below, I’ve laid out key growth figures on how market analysts predict Pareto Bank’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. See our latest analysis for Pareto Bank

Analysts’ expectations for next year seems pessimistic, with earnings decreasing by -8.20%. Beyond this, earnings should continue to be below today’s level, with a fall of -4.09% in 2020, eventually reaching ØRE299.82M in 2021.

OB:PARB Future Profit Apr 12th 18
OB:PARB Future Profit Apr 12th 18

Even though it is informative knowing the rate of growth each year relative to today’s figure, it may be more beneficial to gauge the rate at which the business is rising or falling on average every year. The pro of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Pareto Bank’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 0.40%. This means that, we can expect Pareto Bank will grow its earnings by 0.40% every year for the next few years.

Next Steps:

For Pareto Bank, I’ve put together three key factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is PARB 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 PARB is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PARB? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!