Is Now An Opportune Moment To Examine Norwegian Air Shuttle ASA (OB:NAS)?

Norwegian Air Shuttle ASA (OB:NAS), is not the largest company out there, but it received a lot of attention from a substantial price movement on the OB over the last few months, increasing to kr11.85 at one point, and dropping to the lows of kr10.02. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Norwegian Air Shuttle's current trading price of kr10.67 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 Norwegian Air Shuttle’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Norwegian Air Shuttle

What's The Opportunity In Norwegian Air Shuttle?

The share price seems sensible at the moment according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Norwegian Air Shuttle’s ratio of 8.47x is trading slightly above its industry peers’ ratio of 7.75x, which means if you buy Norwegian Air Shuttle today, you’d be paying a relatively reasonable price for it. And if you believe that Norwegian Air Shuttle should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, it seems like Norwegian Air Shuttle’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Norwegian Air Shuttle generate?

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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Norwegian Air Shuttle's earnings over the next few years are expected to increase by 83%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in NAS’s positive outlook, with shares trading around industry price multiples. 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 NAS? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on NAS, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for NAS, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. While conducting our analysis, we found that Norwegian Air Shuttle has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Norwegian Air Shuttle, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.