Why Fastighets AB Balder (publ) (STO:BALD B) Could Be Worth Watching

Fastighets AB Balder (publ) (STO:BALD B), is not the largest company out there, but it received a lot of attention from a substantial price increase on the OM over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Fastighets AB Balder’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Fastighets AB Balder

What Is Fastighets AB Balder Worth?

The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to 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 Fastighets AB Balder’s ratio of 3.22x is trading slightly below its industry peers’ ratio of 4.87x, which means if you buy Fastighets AB Balder today, you’d be paying a reasonable price for it. And if you believe that Fastighets AB Balder should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. 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.

Can we expect growth from Fastighets AB Balder?

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 optimal time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. Furthermore, 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 want to dive deeper into Fastighets AB Balder, you'd also look into what risks it is currently facing. For example, we've found that Fastighets AB Balder has 4 warning signs (2 shouldn't be ignored!) 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.