Argan (ENXTPA:ARG): Assessing Valuation After Recent Share Price Uptick

Argan (ENXTPA:ARG) has seen a small uptick in its share price over the past week, drawing interest from investors curious about recent movements. The company’s stock is up 2% over the past week, adding to its performance this month.

See our latest analysis for Argan.

Argan’s recent share price gains follow a period of subdued momentum, with the 1-year total shareholder return still in negative territory. While the latest uptick hints at renewed optimism or shifting risk perceptions, longer-term returns remain in the red. This suggests investors are watching for a more sustained turnaround.

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With Argan trading about 19% below analysts' average price target and recent financials reflecting mixed trends, the key question is whether the stock is undervalued today or if the market’s expectations already account for future growth.

Price-to-Earnings of 5.7x: Is it justified?

Argan’s shares are trading at a price-to-earnings (P/E) ratio of just 5.7, which signals the market is valuing the company well below both its peer group and the broader industrial REIT sector. With a last close of €64.5 and significant discounts compared to benchmarks, the question is whether this multiple reflects an opportunity or underlying challenges.

The price-to-earnings ratio tells investors how much they are paying for each euro of Argan’s recent net profit. It is a central metric for property companies, since real estate earnings can be more stable, allowing investors to directly compare valuation levels across industry players. In Argan’s case, such a low P/E may suggest that the market doubts the company’s future earnings sustainability, despite its notable past profit surge due to exceptional items.

Relative to its main competitors and the global industrial REITs average (16.7x), Argan stands out as exceptionally cheap. The current P/E is also almost half the estimated fair value multiple (11x), highlighting a gap that could close if confidence in the company’s future performance returns.

Explore the SWS fair ratio for Argan

Result: Price-to-Earnings of 5.7x (UNDERVALUED)

However, slowing annual revenue and net income growth may signal operational challenges. This could mean Argan’s discounted valuation may persist without clear business momentum.

Find out about the key risks to this Argan narrative.

Another View: What Does the DCF Model Say?

Taking a different approach, our DCF model values Argan shares at €79.35. This is about 18.7% above their recent market price, suggesting a significant discount based on cash flow analysis. But does this method offer a clearer opportunity, or does it simply highlight uncertainty about growth?

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 Argan 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 Argan Narrative

If you see things differently or want to dive deeper into the numbers, it takes just a few minutes to put together your own perspective. Do it your way

A great starting point for your Argan research is our analysis highlighting 5 key rewards and 3 important warning signs 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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