Is Colruyt a Bargain After Shares Drop 16% Despite Solid Cash Flow Outlook?

If you own Colruyt Group stock, or are watching from the sidelines for the right entry point, you are not alone. The company’s recent performance has definitely raised a few eyebrows and stirred up some debate. Over the past year, Colruyt shares have shed 22.5%, continuing a downward trend that deepened with a 16.2% drop over the last 30 days alone. Year to date, the stock is off by 12.8%. That sounds rough, but if you zoom out a bit, you’ll see a three-year return of 53.6%, demonstrating that this isn’t just another slow-moving retail story. Clearly, opinions are split: is this a sign of slowing momentum, or a window of undervaluation that could be hiding growth potential?

Broader market shifts, particularly in the European consumer sector, have kept investors on their toes. Shifting consumer preferences and supply chain developments have added fresh volatility. However, these factors have also prompted many to re-examine Colruyt’s fundamentals. Right now, the company earns a value score of 5 out of 6. This means it is considered undervalued on five key measures, which is worth paying attention to, especially if you believe the crowd sometimes gets overly pessimistic or optimistic.

So, what do those valuation checks look like in detail, and should you trust the headline value score? Let’s dig into the evidence behind the numbers and consider a smarter way to put valuation into perspective at the end.

Why Colruyt Group is lagging behind its peers

Approach 1: Colruyt Group Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates what a business is worth today, based on its future projected cash flows. These projections are discounted back to the present using current market rates. This calculation reflects the idea that money in the future is worth less than the same amount today.

For Colruyt Group, the most recent reported Free Cash Flow (FCF) is €259.85 million. Analyst consensus projects ongoing growth, with expectations for FCF to reach €316.13 million by 2028. Beyond this point, further increases are extrapolated by Simply Wall St, resulting in a ten-year FCF projection just above €406 million in 2035. However, accuracy typically decreases with longer-term projections.

Based on these detailed cash flow estimates, the DCF model suggests an intrinsic fair value of €61.34 per share for Colruyt Group. The current market price reflects a 48.1% discount to this value, which leads the model to indicate that Colruyt shares are significantly undervalued at present.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Colruyt Group.

Our Discounted Cash Flow (DCF) analysis suggests Colruyt Group is undervalued by 48.1%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Colruyt Group Price vs Earnings

For established, profitable companies like Colruyt Group, the Price-to-Earnings (PE) ratio is often considered the go-to valuation multiple. It highlights how much investors are willing to pay for each euro of current profit, offering a widely recognized snapshot of market expectations.

A company’s “normal” or “fair” PE ratio is influenced by future growth expectations and risk. When growth prospects are high and risks are low, the market typically assigns a higher PE. Conversely, slower growth or elevated risk tends to push valuations down.

Colruyt Group currently trades at an 11.5x PE ratio. This stands out against both the industry average of 17.2x and a peer group average of 23.4x, signaling a significant discount relative to the broader Consumer Retailing sector. While these comparisons can be enlightening, they risk oversimplifying by not factoring in all the important context that drives a stock’s fair value.

That is where Simply Wall St’s Fair Ratio comes in. Unlike basic peer comparisons, the Fair Ratio synthesizes a company’s earnings growth, profit margin, market cap, industry norms and specific risk factors to tailor a more precise, “just right” valuation benchmark. It is designed to provide a more robust and nuanced view of fair value than simply mirroring peers or sector averages.

For Colruyt Group, the actual 11.5x PE is very close to its Fair Ratio, suggesting the market’s pricing is about right relative to the company’s fundamentals and risk profile.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Colruyt Group Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let’s introduce you to Narratives. A Narrative is a user’s story behind the numbers, combining your personal view on a company’s future with financial forecasts and ultimately a fair value. By connecting Colruyt Group’s business outlook with your own estimates for revenue, earnings and margins, Narratives let you translate your convictions into concrete financial outcomes.

Narratives do not just help you see whether a stock looks “cheap” or “expensive.” They let you test your investment story against real, evolving data. Available in the Simply Wall St Community page, they are easy and accessible, giving millions of investors a dynamic way to decide if they should buy or sell by comparing Fair Value to the current Price.

Because Narratives update automatically when news or company results emerge, your analysis always stays relevant. For instance, some Colruyt Group Community members believe its fair value is well above the current share price, while others see it as fully valued or even overvalued, bringing a range of perspectives to every investment decision.

Do you think there's more to the story for Colruyt Group? Create your own Narrative to let the Community know!

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