SpareBank 1 Telemark (OB:SBTE): Can Growth Justify Its April Share Price?

SpareBank 1 Telemark (OB:SBTE) is considered a high growth stock. However its last closing price of NOK114.5 left investors wondering whether this growth has already been factored into the share price. Let’s take a look at some key metrics to determine whether there’s any value here for current and potential future investors.

See our latest analysis for SpareBank 1 Telemark

Has the SBTE train has slowed down?

SpareBank 1 Telemark is poised for significantly high earnings growth in the near future. Analyst consensus expectation is extremely positive with earnings forecasted to rise significantly from today’s level of NOK11.2 to NOK13.849 over the next three years. On average, this leads to a growth rate of 16% each year, which illustrates a highly optimistic outlook in the near term.

Can SBTE’s share price be justified by its earnings growth?

SpareBank 1 Telemark is trading at quite low price-to-earnings (PE) ratio of 10.22x. This tells us the stock is undervalued relative to the current NO market average of 13.52x , and overvalued based on current earnings compared to the Banks industry average of 8.91x .

OB:SBTE Price Estimation Relative to Market, April 2nd 2019
OB:SBTE Price Estimation Relative to Market, April 2nd 2019

We already know that SBTE appears to be overvalued when compared to its industry average. But, seeing as SpareBank 1 Telemark 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 10.22x and expected year-on-year earnings growth of 16% give SpareBank 1 Telemark a very low PEG ratio of 0.62x. This tells us that when we include its growth in our analysis SpareBank 1 Telemark’s stock can be considered relatively cheap , based on the fundamentals.

What this means for you:

SBTE’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 highly recommend you to complete your research by taking a look at the following:

  1. Financial Health: Are SBTE’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 SBTE 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 SBTE’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.

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.