StrongPoint ASA : Neutral outlook but great fundamentals

StrongPoint ASA relative valuation is now NEUTRAL. It was previously rated UNDERVALUED, and has a fundamental analysis score of 69.

Our analysis is based on comparing StrongPoint ASA with the following peers – CPI Peripherals International, S&T AG, Bouvet ASA and METRIC mobility solutions AG (CPI-GR, SANT-DE, BOUVET-NO and HWSA-DE).

Relative Valuation

StrongPoint ASA is currently neutrally valued, as its previous close of NOK 15.80 lies within the CapitalCube estimate range of NOK 15.68 to NOK 18.65. Over the last 52 week period, StrongPoint ASA has fluctuated between NOK 10.15 and NOK 17.50.

Relative Valuation

Company Overview

  • From a peer analysis perspective, relative outperformance last month is up from a median performance last year.
  • StrongPoint ASA trades at a lower Price/Book multiple (2.42) than its peer median (3.16).
  • The market expects STRONG-NO to grow more slowly than its peers and for its median ROE to decline.
  • STRONG-NO has relatively high profit margins while operating with median asset turns.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • Over the last five years, STRONG-NO‘s return on assets has improved from median to better than the median among its peers, suggesting the company has found relative operating advantages.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • While STRONG-NO‘s revenue growth in recent years has been above the peer median, the stock’s P/E ratio is less than the peer median suggesting that the company’s earnings may be peaking and the market expects a decline in its growth expectations.
  • The company’s capital investment seems appropriate for a business with peer median returns.
  • STRONG-NO has the financial and operating capacity to borrow quickly.

Investment Outlook

StrongPoint ASA has a fundamental score of 69 and has a relative valuation of NEUTRAL.

StrongPoint ASA is on the top left quadrant of the CapitalCube Value – Price Matrix. We classify this space a ‘Value Play’. Here, StrongPoint ASA is potentially undervalued, since it trades below its CapitalCube Implied Price of 17.16. At the same time, StrongPoint ASA is also fundamentally strong with a score of 69. This is a classic value stock definition.

Fundamentals Vs Relative Valuation

Quadrant label definitions. Hover to know more

Safety, Value Play, Value Trap, Speculative

Drivers of Valuation

The market expects STRONG-NO‘s current median rates of return to decline.

The market expects less growth from STRONG-NO than the median of its chosen peers (P/E of 13.46 compared to peer median of 17.05) and for its current rates of return that are around peer median (ROE of 18.21%) to decline.

The company trades at a lower Price/Book multiple of 2.42 compared to its peer median of 3.16.

Valuation Drivers

Quadrant label definitions. Hover to know more

Outperforming, Harvesting, Challenged, Turnaround

STRONG-NO has moved to a relatively low P/E from a median ROE and P/E profile at the recent year-end.

ROE % (On Common Equity)

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

StrongPoint ASA engages in the development, production, integration, and marketing of retail technology solutions. It operates through the following segments: Proprietary Technologies, 3rd Party Technologies, and Labels. The Proprietary Technologies segment refers to the sale and services of patented technological solutions. The 3rd Party Technologies delivers solutions from third party technological suppliers. The Labels segment designs, produces, and sells self adhesive labels. The company was founded on December 14, 2000 and is headquartered in Raelingen, Norway.

Disclaimer

The information presented in this report has been obtained from sources deemed to be reliable, but AnalytixInsight does not make any representation about the accuracy, completeness, or timeliness of this information. This report was produced by AnalytixInsight for informational purposes only and nothing contained herein should be construed as an offer to buy or sell or as a solicitation of an offer to buy or sell any security or derivative instrument. This report is current only as of the date that it was published and the opinions, estimates, ratings and other information may change without notice or publication. Past performance is no guarantee of future results. Prior to making an investment or other financial decision, please consult with your financial, legal and tax advisors. AnalytixInsight shall not be liable for any party’s use of this report. AnalytixInsight is not a broker-dealer and does not buy, sell, maintain a position, or make a market in any security referred to herein. One of the principal tenets for us at AnalytixInsight is that the best person to handle your finances is you. By your use of our services or by reading any our reports, you’re agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that AnalytixInsight, its directors, its employees, and its agents will not be liable for any investment decision made or action taken by you and others based on news, information, opinion, or any other material generated by us and/or published through our services. For a complete copy of our disclaimer, please visit our website www.analytixinsight.com.