Is Olav Thon Eiendomsselskap ASA (OB:OLT) Potentially Undervalued?

Olav Thon Eiendomsselskap ASA (OB:OLT), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the OB. As a kr18b market cap stock, it seems odd Olav Thon Eiendomsselskap is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s take a look at Olav Thon Eiendomsselskap’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Olav Thon Eiendomsselskap

Is Olav Thon Eiendomsselskap still cheap?

Olav Thon Eiendomsselskap appears to be expensive according to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Olav Thon Eiendomsselskap’s ratio of 42.25x is above its peer average of 8.43x, which suggests the stock is trading at a higher price compared to the Real Estate industry. But, is there another opportunity to buy low in the future? Given that Olav Thon Eiendomsselskap’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Olav Thon Eiendomsselskap generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Olav Thon Eiendomsselskap's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? OLT’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe OLT should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on OLT for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for OLT, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Olav Thon Eiendomsselskap, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 3 warning signs for Olav Thon Eiendomsselskap (of which 1 can't be ignored!) you should know about.

If you are no longer interested in Olav Thon Eiendomsselskap, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

If you’re looking to trade Olav Thon Eiendomsselskap, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.