Is Now The Time To Look At Buying ACS, Actividades de Construcción y Servicios, S.A. (BME:ACS)?

ACS, Actividades de Construcción y Servicios, S.A. (BME:ACS) led the BME gainers with a relatively large price hike in the past couple of weeks. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on ACS Actividades de Construcción y Servicios’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for ACS Actividades de Construcción y Servicios

What is ACS Actividades de Construcción y Servicios worth?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 12.89x is currently trading in-line with its industry peers’ ratio, which means if you buy ACS Actividades de Construcción y Servicios today, you’d be paying a relatively reasonable price for it. Is there another opportunity to buy low in the future? Since ACS Actividades de Construcción y Servicios’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will ACS Actividades de Construcción y Servicios generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 45% over the next couple of years, the future seems bright for ACS Actividades de Construcción y Servicios. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? ACS’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at ACS? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on ACS, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for ACS, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about ACS Actividades de Construcción y Servicios as a business, it's important to be aware of any risks it's facing. Our analysis shows 5 warning signs for ACS Actividades de Construcción y Servicios (1 can't be ignored!) and we strongly recommend you look at these before investing.

If you are no longer interested in ACS Actividades de Construcción y Servicios, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

If you’re looking to trade ACS Actividades de Construcción y Servicios, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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