Vår Energi (OB:VAR) Valuation in Focus After Special Dividend Payout Approval

Vår Energi (OB:VAR) just wrapped up an extraordinary general meeting where shareholders gave the green light to a hefty dividend payout for the third quarter. This move highlights management’s focus on rewarding investors directly.

See our latest analysis for Vår Energi.

On the heels of that dividend approval, Vår Energi’s share price has shown solid momentum in recent weeks, with a 1-month share price return of nearly 7%. This recaptures some ground after a softer start to the year. Investors who have stayed the course are now sitting on a 9.4% total shareholder return over 12 months and an impressive 57.4% total return since listing. This suggests optimism is building, especially as new projects like Balder Next get underway.

If management’s commitment to rewarding shareholders caught your interest, this could be a perfect moment to broaden your search and discover fast growing stocks with high insider ownership

Yet with shares recovering and a fresh dividend on the way, the real question is whether Vår Energi is still trading at an attractive valuation, or if the market has already priced in all the growth to come.

Most Popular Narrative: 9.4% Undervalued

The most widely followed narrative suggests fair value for Vår Energi at NOK 38.49, which is over 9% above the last close. This indicates that market pricing may lag current analyst expectations even after recent price gains.

Material, near-term production ramp from 9 new project startups and successful ramp-up at Jotun FPSO and Johan Castberg will nearly double output versus 2023, underpinning robust top-line growth and EBITDA expansion.

Read the complete narrative.

Curious what powers that high fair value? The narrative assumes a rapid output boost and a future profit multiple more commonly seen in global growth leaders. Want to know which bold projections are driving these numbers? See the full reveal inside the narrative.

Result: Fair Value of NOK38.49 (UNDERVALUED)

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

However, accelerated energy transition policies or challenges posed by ageing North Sea assets could significantly change Vår Energi’s long-term growth outlook.

Find out about the key risks to this Vår Energi narrative.

Another View: Market Multiples Raise Caution

Looking from a different angle, Vår Energi’s current share price works out to a price-to-earnings ratio of 14.8x, which is higher than both the peer average of 10.2x and the European oil and gas sector at 13.8x. This is also far above the fair ratio of 8.6x, indicating the stock trades at a premium. Could this leave less room for upside if market sentiment turns?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Vår Energi Narrative

If you see things differently or want to do a deeper dive into the numbers yourself, it’s quick and easy to shape your own viewpoint in just a few minutes. Do it your way

A great starting point for your Vår Energi research is our analysis highlighting 3 key rewards and 2 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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