SpareBank 1 Østlandet (OB:SPOL): Will The Growth Last?

The most recent earnings update SpareBank 1 Østlandet’s (OB:SPOL) released in December 2018 indicated that the company benefited from a strong tailwind, eventuating to a double-digit earnings growth of 15%. Below is a brief commentary on my key takeaways on how market analysts predict SpareBank 1 Østlandet’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

See our latest analysis for SpareBank 1 Østlandet

Analysts’ outlook for next year seems positive, with earnings growing by a significant 69%. This strong level of earnings is expected to be maintained in the following year, before rising up further to øre1.8b in 2022.

OB:SPOL Past and Future Earnings, April 18th 2019
OB:SPOL Past and Future Earnings, April 18th 2019

Even though it’s helpful to be aware of the growth rate each year relative to today’s value, it may be more insightful gauging the rate at which the company is moving every year, on average. The advantage of this method is that it ignores near term flucuations and accounts for the overarching direction of SpareBank 1 Østlandet’s earnings trajectory over time, be more volatile. To calculate this rate, I put 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 15%. This means that, we can presume SpareBank 1 Østlandet will grow its earnings by 15% every year for the next couple of years.

Next Steps:

For SpareBank 1 Østlandet, there are three fundamental aspects you should further examine:

  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 SPOL 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 SPOL is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SPOL? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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.