A Look at Southern Cross Electrical Engineering (ASX:SXE) Valuation After Record Results and Infrastructure Growth Outlook

Southern Cross Electrical Engineering (ASX:SXE) has caught investor attention after announcing record revenue and profit for FY2025, as a result of strong project activity in data centres, the Collie Battery Energy Storage System, and Western Sydney Airport.

See our latest analysis for Southern Cross Electrical Engineering.

Following its record results, Southern Cross Electrical Engineering’s momentum has only accelerated. Its 1-month share price return of 12.3% and 90-day gain of 28.5% reflect renewed optimism in the market. With a total shareholder return of 43.4% over the past year and an incredible 579% five-year total return, there is clear evidence that both recent news and long-term execution are igniting interest from investors.

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With record results and a history of strong returns, the big question is whether Southern Cross Electrical Engineering remains undervalued, or if its impressive momentum means the market has already priced in all future growth.

Most Popular Narrative: 6.7% Undervalued

With Southern Cross Electrical Engineering’s last close at A$2.28, the most widely followed narrative assigns a fair value of A$2.445, suggesting upside remains for patient investors. Instead of relying solely on market optimism, this narrative builds its case on industry tailwinds and a disciplined, acquisition-driven strategy fueling long-term growth potential.

“Strong financial health and strategic acquisitions enable continued expansion, earnings growth, and enhanced competitive positioning. Heavy reliance on infrastructure projects, industry competition, and M&A-driven growth expose profitability to sector cycles, margin pressure, integration risks, and limited organic expansion opportunities.”

Read the complete narrative.

What’s actually driving the price target? It’s not just recent contract wins or a run-up in the share price. This narrative hinges on a future financial model built around rising margins, material revenue gains, and an earnings forecast that could reset investor expectations. The recipe behind this valuation is not what most would guess, and the numbers stand out.

Result: Fair Value of $2.445 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, declining order books and tough competition across construction could pressure earnings and profits. This may challenge some of the optimism that currently surrounds Southern Cross Electrical Engineering.

Find out about the key risks to this Southern Cross Electrical Engineering narrative.

Another View: Multiples Suggest a Caution Flag

While one valuation points to upside, our market comparison tells a different story. Southern Cross Electrical Engineering trades at 19.1 times earnings, which is higher than both peers (18.8x) and the broader construction industry (15.9x). The fair ratio, which reflects where the market could realistically head, is 17.1x. There is a risk shares could retrace if enthusiasm fades.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Southern Cross Electrical Engineering Narrative

If you have a different perspective or want to analyse the numbers for yourself, you can build your own Southern Cross Electrical Engineering story in just a few minutes. Do it your way

A great starting point for your Southern Cross Electrical Engineering research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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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.

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