As Sweden's market navigates through a period of economic recalibration, with neighboring European indices reflecting a mix of cautious optimism and underlying concerns, investors might find potential in stocks that appear undervalued. Understanding which stocks are priced below their estimated worth could offer attractive opportunities, especially in a landscape where discerning value is paramount amidst fluctuating market conditions.
Top 10 Undervalued Stocks Based On Cash Flows In Sweden
Overview: Addnode Group AB provides software and services for design, construction, product data information, project collaboration, and facility management across Sweden, Nordic countries, the US, the UK, Germany, and other international markets with a market capitalization of approximately SEK 16.68 billion.
Operations: The company generates revenue through three primary segments: Design Management (SEK 4.70 billion), Product Lifecycle Management (SEK 1.91 billion), and Process Management, which includes Content Management (SEK 1.29 billion).
Estimated Discount To Fair Value: 10.9%
Addnode Group, priced at SEK 127.5, is trading 10.9% below our fair value estimate of SEK 143.07, indicating potential undervaluation based on discounted cash flow analysis. Despite a decrease in profit margins from last year (3.8% down from 5.5%), the company is expected to see robust earnings growth of 21.4% annually over the next three years, outpacing the Swedish market's forecast of 13.8%. Revenue growth projections also remain strong at an annual rate of 8.8%, significantly higher than the broader market's expectation of 1.7%.
Overview: Husqvarna AB, a company based in Sweden, specializes in manufacturing and distributing outdoor power products, watering products, and lawn care equipment, with a market capitalization of approximately SEK 49.51 billion.
Operations: The company's revenue is primarily derived from three segments: Gardena at SEK 13.06 billion, Husqvarna Construction at SEK 8.23 billion, and Husqvarna Forest & Garden at SEK 29.38 billion.
Estimated Discount To Fair Value: 39.3%
Husqvarna, with a current price of SEK 85.3, is identified as trading below its fair value estimate of SEK 140.58, reflecting a significant undervaluation based on discounted cash flow analysis. Despite recent executive changes and a dip in Q1 earnings to SEK 1,322 million from SEK 1,653 million year-over-year, the company's earnings are expected to grow by an impressive average of 24.69% annually over the next three years. However, its dividend coverage is weak and it carries a high level of debt.
Overview: Sweco AB (publ), a global provider of architecture and engineering consultancy services, has a market capitalization of approximately SEK 53.47 billion.
Operations: Sweco's revenue is primarily generated through its operations in Sweden (SEK 8.52 billion), followed by Belgium (SEK 3.92 billion), Norway (SEK 3.39 billion), Finland (SEK 3.67 billion), Denmark (SEK 2.98 billion), the Netherlands (SEk 2.89 billion), and Germany & Central Europe (SEk 2.62 billion).
Estimated Discount To Fair Value: 30.9%
Sweco, priced at SEK 149.4, is evaluated as significantly undervalued with a fair value estimate of SEK 216.16 based on discounted cash flow analysis. Recent strategic alliances, such as the design partnership for VoltH2's new hydrogen plant in Delfzijl, underscore its robust engagement in large-scale infrastructure projects supporting sustainable energy solutions. Despite a slight dip in Q1 earnings to SEK 558 million from SEK 625 million year-over-year and an unstable dividend track record, Sweco is forecasted to experience revenue growth of 5.3% annually and earnings growth of 16.41% per year, outpacing the Swedish market's average.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.