At kr60.57, Is It Time To Put Fastighets AB Balder (publ) (STO:BALD B) On Your Watch List?

Fastighets AB Balder (publ) (STO:BALD B), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the OM. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Fastighets AB Balder’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Fastighets AB Balder

What's The Opportunity In Fastighets AB Balder?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. 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 Fastighets AB Balder’s ratio of 3.03x is trading slightly below its industry peers’ ratio of 4.63x, which means if you buy Fastighets AB Balder today, you’d be paying a decent price for it. And if you believe Fastighets AB Balder should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Furthermore, it seems like Fastighets AB Balder’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Fastighets AB Balder generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Fastighets AB Balder, at least in the near future.

What This Means For You

Are you a shareholder? BALD B seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on BALD B, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on BALD B for a while, now may not be the most advantageous time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on BALD B should the price fluctuate below the industry PE ratio.

If you'd like to know more about Fastighets AB Balder as a business, it's important to be aware of any risks it's facing. For example, we've found that Fastighets AB Balder has 3 warning signs (2 are a bit concerning!) that deserve your attention before going any further with your analysis.

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

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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.