While Corporación América Airports S.A. (NYSE:CAAP) might not have the largest market cap around , it led the NYSE gainers with a relatively large price hike in the past couple of weeks. The recent jump in the share price has meant that the company is trading at close to its 52-week high. As a US$3.3b market-cap stock, it seems odd Corporación América Airports is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let's examine Corporación América Airports's valuation and outlook in more detail to determine if there's still a bargain opportunity.
Is Corporación América Airports Still Cheap?
Good news, investors! Corporación América Airports is still a bargain right now according to our price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, we've used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock's cash flows. we find that Corporación América Airports's ratio of 9.72x is below its peer average of 14.37x, which indicates the stock is trading at a lower price compared to the Infrastructure industry. However, given that Corporación América Airports's share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Corporación América Airports generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Corporación América Airports, it is expected to deliver a relatively unexciting earnings growth of 6.0%, which doesn't help build up its investment thesis. Growth doesn't appear to be a main reason for a buy decision for the company, at least in the near term.
What This Means For You
Are you a shareholder? Even though growth is relatively muted, since CAAP is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.
Are you a potential investor? If you've been keeping an eye on CAAP for a while, now might be the time to make a leap. Its future profit outlook isn't fully reflected in the current share price yet, which means it's not too late to buy CAAP. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.
So while earnings quality is important, it's equally important to consider the risks facing Corporación América Airports at this point in time. In terms of investment risks, we've identified 2 warning signs with Corporación América Airports, and understanding them should be part of your investment process.
If you are no longer interested in Corporación América Airports, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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.
