Telenor (OB:TEL) Valuation: What the Latest 9% Share Price Dip Means for Investors

Telenor (OB:TEL) shares have pulled back this month, with the stock slipping about 9% over the past four weeks. Investors are weighing recent performance alongside the company’s modest annual revenue and net income growth.

See our latest analysis for Telenor.

Zooming out, Telenor’s 1-year total shareholder return of 16.2% reflects solid longer-term momentum despite the recent 30-day share price dip of 9.4%. After a strong start to the year, the latest pullback suggests investors are recalibrating expectations, but broader returns remain healthy compared to historical gains.

If you’re wondering what else is catching investor attention right now, it’s worth taking a look at fast growing stocks with high insider ownership.

With Telenor’s recent dip and a share price still trading below analyst targets, the question now becomes whether the stock offers an attractive entry point or if the market has already accounted for the company’s future prospects.

Price-to-Earnings of 20.3x: Is it justified?

Telenor trades at a price-to-earnings (P/E) ratio of 20.3x, which sits above both the European telecom industry and the Norwegian market average. At NOK150.6 per share, investors are paying a premium for the company's earnings, despite modest growth forecasts.

The P/E ratio measures how much investors are willing to spend for each unit of earnings and often signals expectations for future growth or reflects the quality of current profits. For the telecom sector, where growth is typically stable but unspectacular, a high P/E can stand out as a red flag or a mark of strong confidence.

Compared to the European telecom industry average of 17.8x, Telenor appears expensive. However, it looks like a relative bargain alongside its direct peers, which on average trade at 33.5x. This mixed picture points to a valuation that may be stretched for the sector, but less so against close competitors. No fair ratio is available to suggest where the market could ultimately rebalance.

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

Result: Price-to-Earnings of 20.3x (OVERVALUED)

However, slower revenue growth and a premium valuation remain key risks, which could challenge investor optimism if business momentum stalls further.

Find out about the key risks to this Telenor narrative.

Another View: Discounted Cash Flow Says Undervalued

While Telenor appears overvalued on a price-to-earnings basis, our DCF model offers a sharply different perspective. The SWS DCF model estimates Telenor's fair value at NOK353.32 per share. This suggests the stock trades at a significant 57% discount. Why is there such a large gap between the market price and intrinsic value?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Telenor for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 837 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Telenor Narrative

If you want to reach your own conclusion or dig into the numbers further, it takes just a few minutes to create your own view. Do it your way

A great starting point for your Telenor research is our analysis highlighting 2 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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