Grupo Aeroportuario del Sureste SAB de CV (ASR, Financial) has recently experienced a daily loss of -27.57% and a 3-month loss of -36.56%. Despite these losses, the company's Earnings Per Share (EPS) (EPS) stands at 17.86. This begs the question, is the stock significantly undervalued? This article aims to delve into an in-depth valuation analysis of Grupo Aeroportuario del Sureste SAB de CV (ASR) to answer this question. Read on to uncover the intrinsic value and future prospects of this company.
Company Introduction
Grupo Aeroportuario del Sureste SAB de CV operates airports in southeast Mexico. The company's segments include Cancun, Aerostar, Airplan, Merida, Villahermosa, Holding and Services, and others. The Cancun segment generates the maximum revenue for the company. With a stock price of $175.56, the company has a market cap of $5.30 billion. Comparing this with the GF Value of $332.62, it appears that the stock might be significantly undervalued.
Understanding GF Value
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. This valuation method takes into account historical trading multiples, a GuruFocus adjustment factor based on the company's past performance and growth, and future business performance estimates. The GF Value Line on our summary page provides an overview of the fair trading value of the stock. If the stock price is significantly above the GF Value Line, it is overvalued, and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
Grupo Aeroportuario del Sureste SAB de CV's stock appears to be significantly undervalued based on this valuation method. The stock's current price of $175.56 per share and a market cap of $5.30 billion suggest that its future return could be higher than its business growth, given its current undervalued status.
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Assessing Financial Strength
Before investing in a company's stock, it's crucial to assess its financial strength. Investing in companies with poor financial strength poses a higher risk of permanent loss. A great way to understand a company's financial strength is by looking at its cash-to-debt ratio and interest coverage. Grupo Aeroportuario del Sureste SAB de CV has a cash-to-debt ratio of 1.1, which is better than 68.91% of 936 companies in the Transportation industry. The overall financial strength of Grupo Aeroportuario del Sureste SAB de CV is 8 out of 10, indicating strong financial health.
Profitability and Growth
Investing in profitable companies carries less risk, especially those that have demonstrated consistent profitability over the long term. A company with high profit margins typically offers better performance potential than a company with low profit margins. Grupo Aeroportuario del Sureste SAB de CV has been profitable 10 years over the past 10 years. During the past 12 months, the company had revenues of $1.40 billion and an Earnings Per Share (EPS) of $17.86. Its operating margin of 59.25% is better than 98.73% of 947 companies in the Transportation industry. Overall, GuruFocus ranks Grupo Aeroportuario del Sureste SAB de CV's profitability as strong.
Growth is probably one of the most important factors in the valuation of a company. Growth is closely correlated with the long-term performance of a company's stock. If a company's business is growing, it usually creates value for its shareholders, especially if the growth is profitable. Conversely, if a company's revenue and earnings are declining, the value of the company will decrease. Grupo Aeroportuario del Sureste SAB de CV's 3-year average revenue growth rate is better than 71.79% of 911 companies in the Transportation industry. Its 3-year average EBITDA growth rate is 17.1%, which ranks better than 62.71% of 818 companies in the Transportation industry.
ROIC vs WACC
Another way to look at the profitability of a company is to compare its return on invested capital (ROIC) and the weighted cost of capital (WACC). ROIC measures how well a company generates cash flow relative to the capital it has invested in its business. WACC is the rate that a company is expected to pay on average to all its security holders to finance its assets. We want the ROIC to be higher than the WACC. For the past 12 months, Grupo Aeroportuario del Sureste SAB de CV's ROIC is 21.82, and its WACC is 13.07.
Conclusion
In conclusion, the stock of Grupo Aeroportuario del Sureste SAB de CV (ASR, Financial) appears to be significantly undervalued. The company's financial condition is strong, and its profitability is robust. Its growth ranks better than 62.71% of 818 companies in the Transportation industry. To learn more about Grupo Aeroportuario del Sureste SAB de CV stock, you can check out its 30-Year Financials here.
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