In This Article:
Fondia Oyj (HEL:FONDIA), a €54.6m small-cap, is a professional services company operating in an industry, which generally follows the ups and downs of the economic cycle, as its services cater to various industries across different sectors. Professional services analysts are forecasting for the entire industry, a strong double-digit growth of 13.0% in the upcoming year , and an enormous growth of 37.2% over the next couple of years. However this rate still came in below the growth rate of the FI stock market as a whole. In this article, I’ll take you through the sector growth expectations, and also determine whether Fondia Oyj is a laggard or leader relative to its service sector peers.
See our latest analysis for Fondia Oyj
What’s the catalyst for Fondia Oyj’s sector growth?
Given activities are primarily project-based, the performance of the industry depends on the activities of other sectors. In the past year, the industry delivered growth in the teens, beating the FI market growth of 9.7%. Fondia Oyj leads the pack with its impressive earnings growth of 70.0% over the past year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with Fondia Oyj poised to deliver a 24.2% growth over the next couple of years compared to the industry’s 13.0%. This growth may make Fondia Oyj a more expensive stock relative to its peers.
Is Fondia Oyj and the sector relatively cheap?
The professional services industry is trading at a PE ratio of 20.85x, in-line with the FI stock market PE of 19.29x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a higher 22.1% compared to the market’s 14.6%, potentially illustrative of past tailwinds. On the stock-level, Fondia Oyj is trading at a higher PE ratio of 36.57x, making it more expensive than the average professional services stock. In terms of returns, Fondia Oyj generated 31.5% in the past year, which is 9.4% over the professional services sector.
Next Steps:
Fondia Oyj’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this higher growth prospect is also reflected in the company’s price, suggested by its higher PE ratio relative to its peers. If Fondia Oyj has been on your watchlist for a while, now may not be the best time to enter into the stock since it is trading at a higher valuation compared to other professional services companies. However, before you make a decision on the stock, I suggest you look at Fondia Oyj’s fundamentals in order to build a holistic investment thesis.