Is Sparebank 1 Nordvest’s (OB:SNOR) Stock Available For A Good Price After Accounting For Growth?

Sparebank 1 Nordvest (OB:SNOR) is a stock well-positioned for future growth, but many investors are wondering whether its last closing price of NOK107 is based on unrealistic expectations. Let’s look into this by assessing SNOR’s expected growth over the next few years.

Check out our latest analysis for Sparebank 1 Nordvest

What can we expect from Sparebank 1 Nordvest in the future?

Sparebank 1 Nordvest is poised for significantly high earnings growth in the near future. Analyst expectations are extremely bullish with earnings per share estimated to surge from current levels of NOK10.37 to NOK11.88 over the next three years. On average, this leads to a growth rate of 20% each year, which signals a market-beating outlook in the upcoming years.

Is SNOR available at a good price after accounting for its growth?

Sparebank 1 Nordvest is trading at quite low price-to-earnings (PE) ratio of 10.32x. This tells us the stock is undervalued relative to the current NO market average of 13.58x , and overvalued based on current earnings compared to the Banks industry average of 9.16x .

OB:SNOR Price Estimation Relative to Market, April 18th 2019
OB:SNOR Price Estimation Relative to Market, April 18th 2019

We already know that SNOR appears to be overvalued when compared to its industry average. But, since Sparebank 1 Nordvest is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. A PE ratio of 10.32x and expected year-on-year earnings growth of 20% give Sparebank 1 Nordvest a very low PEG ratio of 0.52x. This tells us that when we include its growth in our analysis Sparebank 1 Nordvest’s stock can be considered relatively cheap , based on its fundamentals.

What this means for you:

SNOR’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: Are SNOR’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 SNOR 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 SNOR’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.