At €39.78, Is Ferrovial SE (BME:FER) Worth Looking At Closely?

Let's talk about the popular Ferrovial SE (BME:FER). The company's shares saw a decent share price growth of 11% on the BME over the last few months. The company is now trading at yearly-high levels following the recent surge in its share price. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Ferrovial’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Ferrovial

What Is Ferrovial Worth?

Ferrovial is currently expensive based on our price multiple model, where we look at the company's price-to-earnings ratio in comparison to the industry average. We’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 39.74x is currently well-above the industry average of 31.82x, meaning that it is trading at a more expensive price relative to its peers. Furthermore, Ferrovial’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach levels around its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What does the future of Ferrovial look like?

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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 9.6% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Ferrovial, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in FER’s outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe FER should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on FER for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Ferrovial as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Ferrovial you should be aware of.

If you are no longer interested in Ferrovial, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.