Corporacion America Airports SA (CAAP, Financial) has caught the attention of investors with its notable daily gain of 11.51% and a 3-month gain of 6.6%. With an Earnings Per Share (EPS) of $0.97, the question arises: Is the stock modestly overvalued? This article will delve into the valuation analysis of CAAP, providing investors with a deeper understanding of its market status and potential future performance.
Company Introduction
Corporacion America Airports SA operates a robust portfolio of airport concessions across several countries, with a significant revenue stream coming from its Argentina segment. The company's diverse revenue is categorized into Aeronautical, Non-Aeronautical, Commercial, Construction Service, and Other Revenue. Presently, CAAP's stock price stands at $15.02, which, when juxtaposed with its Fair Value (GF Value) of $11.59, suggests that the stock might be modestly overvalued. Let's explore this further by diving into the financial details and intrinsic value of Corporacion America Airports SA.
Summarize GF Value
The GF Value is a unique measure that reflects the intrinsic value of a stock. It is computed based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line is a visual representation that helps investors discern whether a stock is trading above or below its fair value. For Corporacion America Airports SA, the GF Value suggests the stock is modestly overvalued at its current market cap of $3.80 billion. This valuation implies that the long-term return of CAAP's stock might be less than its business growth potential.
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Financial Strength
Assessing a company's financial strength is crucial to mitigate the risk of permanent capital loss. Corporacion America Airports SA presents a cash-to-debt ratio of 0.39, ranking in the lower half compared to its industry peers. This fair financial strength score of 5 out of 10 suggests that investors should be cautious and consider the company's ability to manage debt.
Profitability and Growth
Profitability is a key indicator of a company's financial health. Corporacion America Airports SA has maintained profitability over the past decade, with a strong operating margin of 26.15%, positioning it well within the Transportation industry. The company's profitability rank is a solid 6 out of 10. However, when it comes to growth, CAAP's average annual revenue decline of -4.2% is a concern, though it has managed to achieve a 3-year average EBITDA growth rate of 21.8%, showcasing a mixed growth trajectory.
ROIC vs WACC
Evaluating Corporacion America Airports SA's Return on Invested Capital (ROIC) at 8.19 against its Weighted Average Cost of Capital (WACC) of 10.4 reveals that the company is not generating sufficient returns on its investments, potentially impacting shareholder value. This comparison is an important metric for investors assessing the company's profitability and value creation.
Conclusion
In summary, Corporacion America Airports SA (CAAP, Financial) seems to be modestly overvalued with a fair financial condition and profitability. The company exhibits better growth than two-thirds of its industry counterparts, which may influence its future performance. For a more detailed financial perspective, investors are encouraged to review CAAP's 30-Year Financials.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
