TF Bank (OM:TFBANK): Is the Stock’s Valuation Justified After Strong Q3 2025 Earnings Growth?

TF Bank (OM:TFBANK) just posted its third quarter and nine-month results, and the numbers are up noticeably versus last year. Net interest income and net income both climbed, which caught the eye of investors.

See our latest analysis for TF Bank.

Following this strong set of results, TF Bank’s share price surged over the past quarter, delivering a 27% gain. Its total return for the past year soared to nearly 70%. With momentum clearly building, investors are taking notice of both recent earnings growth and the company’s longer-term track record.

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With such impressive gains and top-line growth, the big question now is whether TF Bank shares remain attractive at today’s levels, or if the market is already pricing in the next leg of growth. Could there be a fresh buying opportunity, or is the stock simply fully valued?

Price-to-Earnings of 16.3x: Is it justified?

TF Bank’s stock currently trades at a price-to-earnings (P/E) ratio of 16.3x, which places it at a premium compared to peers in its sector. This suggests investors are assigning a higher value to each krona of TF Bank’s earnings than they do for other banks in Sweden and Europe.

The P/E ratio helps to measure how much investors are willing to pay today for a company’s future earnings power. For banks, a higher P/E often signals expectations of outsized profit growth or an especially resilient business model. In TF Bank's case, buyers may be factoring in rapid earnings improvements and confidence in the company’s performance outlook.

Looking at the broader market, TF Bank’s P/E of 16.3x is not only above the Swedish banks’ industry average of 9.7x but also exceeds the peer group average of 11.3x. Compared to the SWS estimated fair price-to-earnings ratio of 12.6x, the current multiple appears even more stretched. This indicates that the market might be overly optimistic, and there could be a pullback toward the fair value level if expectations are not met.

Explore the SWS fair ratio for TF Bank

Result: Price-to-Earnings of 16.3x (OVERVALUED)

However, weaker market sentiment or a slowdown in earnings growth could quickly shift investor enthusiasm and put pressure on TF Bank’s above-average valuation.

Find out about the key risks to this TF Bank narrative.

Another View: DCF Suggests a Different Story

While the price-to-earnings multiple points to TF Bank being somewhat stretched, the SWS DCF model tells a more bearish tale. According to this cash flow-based analysis, TF Bank shares are trading well above our estimate of fair value. This could signal downside risk if expectations cool off. Is the market's optimism justified or could reality catch up?

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 TF Bank 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 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 TF Bank Narrative

If you see things differently or want to look beneath the surface for your own insights, you can build your own take in just a few minutes. Do it your way

A great starting point for your TF Bank research is our analysis highlighting 3 key rewards and 3 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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