June 2024 Insight into three Swedish stocks trading below estimated value

With global markets sending mixed signals and some regions experiencing growth while others struggle with economic slowdowns, the Swedish equity market offers unique opportunities for value investors. In such an environment, identifying stocks trading below their estimated intrinsic value could offer the potential for significant returns.

The 10 most undervalued stocks in Sweden based on cash flow

Click here to see the full list of 48 stocks from our Undervalued Swedish Stocks Based on Cash Flows screener.

We examine a selection of our screener results

Overview: Biotage AB (publ) specializes in providing solutions and products for drug discovery and development, analytical testing, and water and environmental testing and has a market capitalization of SEK 12.47 billion.

Operations: The company generates sales of SEK 1.98 billion in its healthcare software division.

Estimated discount to fair value: 47.6%

Biotage is significantly undervalued at SEK 155.8 based on a DCF valuation of SEK 297.39 and is trading 47.6% below its estimated fair value. Despite a recent decline in net income and earnings per share as reported in the first quarter 2024 results, Biotage’s earnings are expected to grow by approximately 20% annually over the next three years, outperforming the Swedish market average. Revenue growth forecasts also outperform market trends at an annual rate of 11.2%, underscoring the potential for value creation despite the current financial inconsistencies.

Overview: Nolato AB specializes in the development, manufacture and sale of plastic, silicone and thermoplastic elastomer products for various industries, including medical, pharmaceutical, consumer electronics and automotive. The company operates worldwide and has a market capitalization of SEK 15.34 billion.

Operations: Sales in the Medical Solutions segment amount to SEK 5.34 billion.

Estimated discount to fair value: 48.9%

Nolato currently trades at SEK 56.95, well below the DCF valuation of SEK 111.5, indicating significant undervaluation. Despite a dividend cut to SEK 1.50, recent financials show robust earnings growth, with net profit increasing from SEK 136 million to SEK 162 million year-on-year and revenue slightly declining from SEK 2,476 million to SEK 2,442 million. The company’s earnings are expected to grow by about 22.7% annually over the next three years, beating the Swedish market forecast of 14%. In addition, annual revenue growth is expected to be about 6.1%, beating the market average of just under two percent.

Overview: Yubico AB specializes in providing authentication solutions for computers, networks and online services and has a market capitalization of SEK 19.85 billion.

Operations: The company generates revenue of SEK 1.93 billion from its security software and services business.

Estimated discount to fair value: 15.3%

Yubico is priced at SEK 230.5 below the estimated fair value of SEK 272.24, representing a slight undervaluation. The company’s revenues and profits are expected to grow by 23.2% and 43.4% annually, respectively, significantly outperforming the Swedish market average. Despite this growth potential, Yubico faces challenges such as a decline in profit margins year-on-year and significant share dilution last year. Recent product improvements aim to strengthen the company’s market position by better meeting enterprise security requirements.

Take advantage

Are you looking for alternative options?

This Simply Wall St article is of a general nature. We comment based solely on historical data and analyst forecasts, using an unbiased methodology. Our articles are not intended as financial advice. They do not constitute a recommendation to buy or sell stocks and do not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.

Do you have feedback on this article? Are you interested in the content? Contact us directly. Alternatively, send an email to [email protected]