Oslo, Norway – – Olav Thon Eiendomsselskap (OB:OLT) is attracting investor attention following the release of its fourth quarter and full-year 2025 results, which revealed increased sales but a decline in net income. The company also recently approved board changes at an extraordinary general meeting, adding another layer of scrutiny to its performance.
Despite relatively stable share price movement recently, with the stock trading at NOK 335.00 as of today, Olav Thon Eiendomsselskap has demonstrated strong long-term returns. Shareholders have seen a total return of 46.1% over the past year and a substantial 127.79% over five years, suggesting a history of value creation that is currently being weighed against more recent financial developments.
For the full year 2025, Olav Thon Eiendomsselskap reported revenue of NOK 3,996 million and net income of NOK 1,884 million. The current market is assessing whether the stock retains value given these figures, or if future growth is already fully priced in.
Valuation Compared to Peers
Currently, Olav Thon Eiendomsselskap is trading at a price-to-earnings (P/E) ratio of 14.1x. What we have is below both the average P/E ratio for the Norwegian market (15.2x) and the average for its peer group (18.2x). This suggests the market is assigning a lower earnings multiple to Olav Thon Eiendomsselskap than to many of its local and sector competitors.
A P/E ratio of 14.1x means investors are currently paying NOK 14.10 for every NOK 1 of annual earnings. For a property rental group that has recently moved into profitability, and with a Return on Equity of 7.5%, this multiple can be interpreted as a measured view of its earnings potential.
Compared to the broader Norwegian market, the 14.1x P/E suggests a modest discount. It aligns with the European real estate sector average of 14.1x, but remains below the 18.2x P/E ratio of its closer real estate peers. This indicates the market is not assigning the same earnings premium to Olav Thon Eiendomsselskap as it does to similar businesses, even after its strong recent shareholder returns.
Conflicting Signals: P/E vs. DCF
While the P/E ratio suggests reasonable valuation relative to peers, a discounted cash flow (DCF) model presents a different perspective. According to analysis as of , the DCF model estimates a fair value of NOK 217.91 per share, significantly below the current trading price of NOK 335.00. This discrepancy highlights a key question for investors: which valuation method should be given more weight?
The difference between the P/E-based valuation and the DCF model underscores the importance of considering multiple perspectives when assessing a stock’s value. The DCF model relies on projections of future cash flows, which are inherently uncertain, while the P/E ratio is based on current earnings. Investors must determine which approach best reflects their own investment horizon and risk tolerance.
Recent quarterly reports show a generally satisfactory development for the Group. Profit before income tax amounted to NOK 568 million in the fourth quarter of 2025, down from NOK 1,262 million in the same period last year. Third quarter profit before tax was NOK 486 million (compared to NOK 502 million in 2024), while the second quarter saw NOK 357 million (up from NOK 286 million the prior year). The first quarter of 2025 reported NOK 1,004 million in profit before tax, an increase from NOK 814 million in the first quarter of 2024.
Looking back to 2024, the Group posted a profit before income tax of NOK 2,863 million, a significant turnaround from the loss of NOK 2,177 million in 2023. This demonstrates a notable improvement in financial performance over the past year.
Risks and Considerations
Investors should also consider sector-specific risks, such as sensitivity to interest rate changes and potential shifts in retail foot traffic and office demand in Norway and Sweden. These factors could significantly impact Olav Thon Eiendomsselskap’s future earnings.
The company’s annual, sustainability, and carbon accounting reports are available for download, providing further insight into its long-term strategy and environmental impact. These reports highlight the company’s commitment to sustainability, with a strategy in place to guide its efforts until 2030.
determining whether Olav Thon Eiendomsselskap represents a compelling investment opportunity requires a thorough analysis of its financial performance, valuation, and the broader economic environment. Investors are encouraged to conduct their own due diligence and consider their individual investment objectives before making any decisions.
