Colruyt Group (ENXTBR:COLR): Evaluating Valuation as Shares Underperform Despite Solid Earnings

Colruyt Group (ENXTBR:COLR) has drawn investor interest recently as its share price continues to move lower, even after modest gains in annual revenue and net income. The stock's performance over the past year has prompted questions about its current valuation.

See our latest analysis for Colruyt Group.

Despite a recent uptick in annual revenue and net income, Colruyt Group’s 1-year total shareholder return sits at -20.8%, which reinforces that longer-term sentiment remains cautious. While the share price has struggled to gain momentum, investors appear to be weighing growth prospects against lingering risks.

If you’re looking to see what else is moving beyond the supermarket aisles, now’s a great time to discover fast growing stocks with high insider ownership.

With shares trading below many analyst price targets and a solid track record of long-term performance, the critical question now is whether Colruyt Group is undervalued, or if the market is simply factoring in future challenges. Could this be an opening for buyers, or is everything already priced in?

Price-to-Earnings of 11.7x: Is it justified?

Colruyt Group's shares are currently trading at a price-to-earnings (P/E) ratio of 11.7x, which is considerably below both the European Consumer Retailing industry average of 17.8x and the peer average of 23.8x. At the last close of €32.52, this signals the market may be discounting future growth or some ongoing risks despite the company's stable operating history.

The price-to-earnings ratio compares a company's current share price to its per-share earnings. It serves as a quick measure of how the market values a firm's profitability. For a retail group like Colruyt, the P/E ratio is especially relevant because it reflects growth potential and the company’s perceived ability to generate future profits in a competitive sector.

Colruyt’s current P/E signals the market is pricing in much more modest future growth and possibly being cautious about the company's near-term outlook. The low multiple may not fully acknowledge Colruyt’s high-quality past earnings or consistent profit growth over five years. This suggests potential undervaluation if those trends resume.

Compared to the industry, Colruyt's 11.7x P/E stands out as a notable discount. With similar companies fetching significantly higher multiples, investors may be underestimating the group’s resilience and ability to rebound from recent setbacks. If market expectations improve, the stock could see multiple expansion toward industry norms.

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

Result: Price-to-Earnings of 11.7x (UNDERVALUED)

However, weaker consumer demand or increasing competitive pressures could weigh on future earnings. This may potentially limit upside even if valuations appear attractive.

Find out about the key risks to this Colruyt Group narrative.

Another View: Discounted Cash Flow Indicates Significant Undervaluation

Taking a look at our DCF model, the picture changes. The SWS DCF model estimates a fair value of €61.35 for Colruyt Group, which is about 47% higher than the current share price of €32.52. This suggests the stock may be deeply undervalued based on future cash flows.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Colruyt Group for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Colruyt Group Narrative

If you want to dig deeper or build your own perspective, you can craft your own research narrative faster than you might think. Do it your way.

A great starting point for your Colruyt Group research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

Ready to supercharge your portfolio? Simply Wall Street’s Screener can help you spot opportunities others are missing, so you never fall behind the market’s next move.

• Earn while you wait and target steady income with these 19 dividend stocks with yields > 3%, which features attractive yields above 3%.
• Accelerate your growth journey by tapping into innovation leaders through these 24 AI penny stocks, harnessing advances in artificial intelligence for potential big winners.
• Secure value early and get ahead on price with these 910 undervalued stocks based on cash flows, a selection built around cash flow potential and market mispricing.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com