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Olav Thon Eiendomsselskap ASA (OB:OLT), a real estate company based in Norway, received a lot of attention from a substantial price movement on the OB over the last few months, increasing to NOK157.6 at one point, and dropping to the lows of NOK141.2. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Olav Thon Eiendomsselskap’s current trading price of NOK144.6 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Olav Thon Eiendomsselskap’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. Check out our latest analysis for Olav Thon Eiendomsselskap
Is Olav Thon Eiendomsselskap still cheap?
Olav Thon Eiendomsselskap appears to be overvalued by 60% at the moment, based on my discounted cash flow valuation. The stock is currently priced at ØRE144.60 on the market compared to my intrinsic value of NOK90.53. Not the best news for investors looking to buy! Furthermore, Olav Thon Eiendomsselskap’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
Can we expect growth from Olav Thon Eiendomsselskap?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. 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 Olav Thon Eiendomsselskap, at least in the near future.
What this means for you:
Are you a shareholder? If you believe OLT should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to reduce your total portfolio risk. But before you make this decision, take a look at whether its fundamentals have changed.