In This Article:
OVB Holding AG (ETR:O4B), a €235.1m small-cap, is a capital market firm operating in an industry, which has been simplifying their business and operating models over the last few years, both for economic reasons and to reduce organizational complexity. Financial services analysts are forecasting for the entire industry, a strong double-digit growth of 26.6% in the upcoming year , and an enormous growth of 36.0% over the next couple of years. However this rate still came in below the growth rate of the DE stock market as a whole. Below, I will examine the sector growth prospects, and also determine whether OVB Holding is a laggard or leader relative to its financial sector peers.
Check out our latest analysis for OVB Holding
What’s the catalyst for OVB Holding’s sector growth?
The threat of disintermediation in the capital markets industry is both real and imminent, taking profits away from traditional incumbent financial institutions. In the previous year, the industry saw growth in the twenties, beating the DE market growth of 13.7%. OVB Holding lags the pack with its negative growth rate of -13.2% over the past year, which indicates the company has been growing at a slower pace than its capital markets peers. Although OVB Holding is poised to deliver a 2.5% growth next year, moving it from negative to positive territory, it still lags its industry average rate of growth of 26.6%.
Is OVB Holding and the sector relatively cheap?
The capital markets sector’s PE is currently hovering around 22.9x, relatively similar to the rest of the DE stock market PE of 20.37x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a lower 8.7% compared to the market’s 12.2%, potentially indicative of past headwinds. On the stock-level, OVB Holding is trading at a PE ratio of 22.7x, which is relatively in-line with the average capital markets stock. In terms of returns, OVB Holding generated 12.4% in the past year, which is 3.7% over the capital markets sector.
Next Steps:
If OVB Holding has been on your watchlist for a while, now may not be the best time to enter into the stock. The company is a capital markets industry laggard in terms of its future growth outlook, and is trading relatively in-line with its peers. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the financial sector. However, before you make a decision on the stock, I suggest you look at OVB Holding’s fundamentals in order to build a holistic investment thesis.