Skanska (OM:SKA B) is back in focus after a series of large United States contract wins, highlighted by a joint venture agreement for the East San Fernando Valley Light Rail Transit Project in Los Angeles.
See our latest analysis for Skanska.
Set against this run of large United States contract wins and leadership changes, Skanska’s share price at SEK262.3 reflects a 1-month share price return of 1.98% and a 3-month share price return of 7.32%. Its 1-year total shareholder return of 15.42% and 3-year total shareholder return of 91.07% point to stronger longer term momentum.
If this kind of project pipeline has your attention, it can be a useful moment to broaden your search using our screener of 39 power grid technology and infrastructure stocks
Bulls see Skanska’s growing United States order book and recent share price strength as support for a higher valuation. Bears worry about execution risk on large projects. Which side do the current valuation metrics support?
Most Popular Narrative: 5.5% Undervalued
The most followed Skanska narrative sets a fair value of SEK277.5 per share, slightly above the last close at SEK262.3, and builds its case around a long project backlog and public infrastructure demand.
Skanska's record-high order backlog (19 months of production, SEK 268 billion) and strong book-to-bill ratios (>100% across all geographies) position the company to benefit from sustained government infrastructure spending, especially in the US and Europe, supporting future revenue growth.
There is a full playbook behind that fair value. It leans heavily on steady revenue expansion, firmer profit margins and a future earnings multiple that steps down from today’s level. Curious which long term profit and cash flow assumptions have to hold for Skanska to line up with that SEK277.5 figure.
Result: Fair Value of SEK277.5 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this Skanska narrative can break if weak Nordic residential and commercial property markets persist or if US property divestments remain slow and continue to tie up capital.
Find out about the key risks to this Skanska narrative.
Next Steps
Skanska’s story carries both enthusiasm and concern, so it makes sense to test the numbers yourself and not just follow the crowd. To weigh up the mix of potential risks and upside, start with a clear view of the 2 key rewards and 1 important warning sign.
Looking for more investment ideas beyond Skanska?
If Skanska has sharpened your focus, now is the time to widen your opportunity set and line up fresh ideas before the next move passes you by.
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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.
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