A Look at SpareBank 1 Sør-Norge (OB:SB1NO) Valuation Following Strong Third Quarter Results

SpareBank 1 Sør-Norge (OB:SB1NO) released its third quarter and nine-month results, showing increases in both net interest income and net income compared to last year. Basic earnings per share edged down slightly.

See our latest analysis for SpareBank 1 Sør-Norge.

Following fresh earnings, SpareBank 1 Sør-Norge’s share price has shown resilience, with a year-to-date gain of 18.18%. Investors who have stuck with the stock have been rewarded, as the one-year total shareholder return stands at an impressive 26%. The longer-term numbers reveal a robust 93% total return over three years. This upward momentum suggests the market is valuing the bank’s consistent profit growth and improved financial outlook.

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With these strong returns and solid growth in revenues and profits, the big question for investors is whether SpareBank 1 Sør-Norge is currently trading at a bargain, or if the market has already priced in the bank's future growth prospects.

Most Popular Narrative: 7.7% Undervalued

SpareBank 1 Sør-Norge’s last close at NOK174.20 sits below the narrative’s estimated fair value of NOK188.75, highlighting room for further upside as projected by analysts.

The bank's expansion and diversification, both geographically (now balanced between Western and Eastern Norway) and across client types (retail, SME, corporate), significantly reduces concentration risk and underpins lending growth and fee income potential over the long term.

Read the complete narrative.

Curious how this high conviction forecast comes together? One bold underlying forecast is the leap in both profitability and margins, paired with aggressive assumptions about lending growth and capital returns. Want to know what makes this narrative's math tick? Dive deeper to see which robust financial trends are fueling the valuation estimate.

Result: Fair Value of $188.75 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing intense competition and the bank’s reliance on real estate could challenge profitability and put pressure on future returns if market conditions soften.

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

Another View: SWS DCF Model Suggests Much Deeper Value

While analysts see limited upside based on earnings forecasts and price targets, our SWS DCF model points to SpareBank 1 Sør-Norge being significantly undervalued. The DCF approach values the shares at NOK360.98, more than double the current price. This raises an intriguing question: could the market be seriously undervaluing the bank’s long-term cash flows?

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

Build Your Own SpareBank 1 Sør-Norge Narrative

If you have a different perspective or want to dig into the numbers yourself, you can build your own narrative for SpareBank 1 Sør-Norge in just a few minutes. Do it your way.

A great starting point for your SpareBank 1 Sør-Norge research is our analysis highlighting 3 key rewards and 4 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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