Unveiling Grupo Aeroportuario del Pacifico SAB de CV (PAC)'s Value: Is It Really Priced Right? ...
With a daily loss of -32.81% and a 3-month loss of -36.32%, Grupo Aeroportuario del Pacifico SAB de CV (NYSE:PAC) is currently trading at $109.94 per share. Despite an Earnings Per Share (EPS) of 10.09, the question arises: Is the stock significantly undervalued? This article aims to answer this question by diving into a comprehensive valuation analysis.
Company Overview
Grupo Aeroportuario del Pacifico SAB de CV is a leading player in the construction, development, and operation of airports in Mexico. With a market cap of $5.60 billion, the company's operations span across Guadalajara, Tijuana, Puerto Vallarta, San Jose del Cabo, Montego Bay, Hermosillo, Guanajuato, and other airports. Guadalajara, in particular, generates the maximum revenue for the company. When compared to the company's GF Value of $270.49, the stock appears to be significantly undervalued.
Understanding GF Value
The GF Value is an exclusive GuruFocus calculation that represents the intrinsic value of a stock. This value is derived from three primary factors: historical multiples, the GuruFocus adjustment factor based on past returns and growth, and future business performance estimates. If the stock price significantly surpasses the GF Value Line, it is considered overvalued, indicating a potentially poor future return. Conversely, if the stock price is significantly below the GF Value Line, it is undervalued, suggesting a higher future return.
Currently, Grupo Aeroportuario del Pacifico SAB de CV's stock gives every indication of being significantly undervalued. This suggests that the long-term return of its stock is likely to be much higher than its business growth.
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Financial Strength
Companies with poor financial strength offer investors a high risk of permanent capital loss. To avoid this, it's essential to review a company's financial strength before deciding to purchase shares. Both the cash-to-debt ratio and interest coverage of a company are great ways to understand its financial strength. Grupo Aeroportuario del Pacifico SAB de CV has a cash-to-debt ratio of 10000, which ranks better than 99.89% of 936 companies in the Transportation industry. The overall financial strength of Grupo Aeroportuario del Pacifico SAB de CV is 8 out of 10, indicating strong financial health.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is generally less risky. Grupo Aeroportuario del Pacifico SAB de CV has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $1.70 billion and Earnings Per Share (EPS) of $10.09. Its operating margin is 48.32%, which ranks better than 97.68% of 947 companies in the Transportation industry. Overall, the profitability of Grupo Aeroportuario del Pacifico SAB de CV is ranked 9 out of 10, indicating strong profitability.
Growth is a critical factor in a company's valuation. Grupo Aeroportuario del Pacifico SAB de CV's 3-year average revenue growth rate is better than 81.23% of 911 companies in the Transportation industry. Its 3-year average EBITDA growth rate is 19.5%, which ranks better than 65.53% of 818 companies in the Transportation industry.
ROIC vs WACC
Another way to assess a company's profitability 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. For the past 12 months, Grupo Aeroportuario del Pacifico SAB de CV's ROIC is 20.62, and its WACC is 13.26.
Conclusion
Overall, Grupo Aeroportuario del Pacifico SAB de CV (NYSE:PAC) stock appears to be significantly undervalued. The company's financial condition is strong, and its profitability is robust. Its growth ranks better than 65.53% of 818 companies in the Transportation industry. To learn more about Grupo Aeroportuario del Pacifico SAB de CV stock, you can check out its 30-Year Financials here.
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This article first appeared on GuruFocus.
