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Is Skandinaviska Enskilda Banken AB (publ.) (STO:SEB A) Potentially Undervalued?

Simply Wall St
·3 mins read

Today we're going to take a look at the well-established Skandinaviska Enskilda Banken AB (publ.) (STO:SEB A). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the OM. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Skandinaviska Enskilda Banken AB (publ.)’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Skandinaviska Enskilda Banken AB (publ.)

What is Skandinaviska Enskilda Banken AB (publ.) worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 7.3% below my intrinsic value, which means if you buy Skandinaviska Enskilda Banken AB (publ.) today, you’d be paying a fair price for it. And if you believe the company’s true value is SEK79.17, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Skandinaviska Enskilda Banken AB (publ.)’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from Skandinaviska Enskilda Banken AB (publ.)?

OM:SEB A Past and Future Earnings May 7th 2020
OM:SEB A Past and Future Earnings May 7th 2020

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 a relatively muted profit growth of 7.6% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Skandinaviska Enskilda Banken AB (publ.), at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in SEB A’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on SEB A, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Skandinaviska Enskilda Banken AB (publ.). You can find everything you need to know about Skandinaviska Enskilda Banken AB (publ.) in the latest infographic research report. If you are no longer interested in Skandinaviska Enskilda Banken AB (publ.), you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.