Scandic Hotels Group is a leading hotel operator with 55k hotel rooms in Scandinavia. The company has recovered to positive cash-flow and earnings after the pandemic. In the coming 5 years it plans to increase the number of rooms with 10.000.

The company started to report IFRS 16 from 2019. Since than earnings per share declined from 7kr to 3.40kr. Bottom line profit growth has been negative for 10 years. The operating margin improved and the profit margin declined due to higher financial costs.

With a PE ratio of 24x, compared to its 10 year average (12x P/E), the market has priced in a positive growth scenario. The current multiple is too high for a good risk/return.