Does The Hype Around Sparebanken Vest’s (OB:SVEG) Growth Justify Its April Share Price?

Looking at Sparebanken Vest’s (OB:SVEG) fundamentals some investors are wondering if its last closing price of NOK52.4 represents a good value for money for this high growth stock. Let’s take a look at some key metrics to determine whether there’s any value here for current and potential future investors.

Check out our latest analysis for Sparebanken Vest

How is SVEG going to perform in the future?

Sparebanken Vest’s growth potential is very attractive. The consensus forecast from 5 analysts is extremely bullish with earnings per share estimated to rise from today’s level of NOK6.04 to NOK7.316 over the next three years. This results in an annual growth rate of 37%, on average, which signals a market-beating outlook in the upcoming years.

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

Stocks like Sparebanken Vest, with a price-to-earnings (P/E) ratio of 8.68x, always catch the eye of investors on the hunt for a bargain. In isolation, this metric can be a bit too simplistic but in comparison to benchmarks, it tells us that SVEG is undervalued relative to the current NO market average of 13.46x , and undervalued based on its latest annual earnings update compared to the Banks average of 8.99x .

OB:SVEG Price Estimation Relative to Market, April 8th 2019
OB:SVEG Price Estimation Relative to Market, April 8th 2019

Sparebanken Vest’s price-to-earnings ratio stands at 8.68x, which is low, relative to the industry average. This already suggests that the stock could be undervalued. However, seeing as Sparebanken Vest 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 8.68x and expected year-on-year earnings growth of 37% give Sparebanken Vest an extremely low PEG ratio of 0.23x. So, when we include the growth factor in our analysis, Sparebanken Vest appears relatively cheap , based on its fundamentals.

What this means for you:

SVEG’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 SVEG’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 SVEG 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 SVEG’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.