A Look at Tel Aviv Stock Exchange (TASE:TASE) Valuation Following Launch of Real Estate 35 Index

Tel-Aviv Stock Exchange (TASE:TASE) is adding to its product lineup with the upcoming launch of the TA-Real Estate 35 index, which spotlights the largest real estate companies listed on the exchange. This move signals TASE’s ongoing efforts to meet growing investor demand for sector-specific benchmarks.

See our latest analysis for Tel-Aviv Stock Exchange.

TASE’s launch of new indices has lined up with growing investor interest, fueling stronger momentum in its own shares. The stock’s year-to-date share price return of 80% speaks for itself, and long-term holders have seen total shareholder returns soar over 100% in the past year alone. This highlights a clear trend of robust outperformance.

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With TASE shares rallying over 100% in the past year, the big question is whether the stock remains undervalued with more upside ahead or if the market has already priced in years of future growth.

Price-to-Earnings of 54.5x: Is it justified?

At a last close of ₪77.00, Tel-Aviv Stock Exchange trades at a significant premium to industry peers based on its price-to-earnings ratio, suggesting the market values its earnings far above the sector average.

The price-to-earnings (P/E) ratio shows how much investors are willing to pay today for a shekel of current earnings. For TASE, this figure stands at 54.5x, which is notably higher than what is generally seen in the capital markets sector.

With such a high P/E, the market is likely pricing in expectations for sustained growth or unique competitive advantages. However, this stretches well beyond the Asian Capital Markets industry, where the average P/E is just 20.9x. This marked gap could indicate over-optimism, with the market assigning TASE a valuation multiple closer to high-flying growth stocks than to its typical peers.

When compared to the peer average P/E of 19.9x, TASE looks even more expensive and this reinforces its status as an outlier among local and regional exchanges.

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

Result: Price-to-Earnings of 54.5x (OVERVALUED)

However, slowing revenue growth or any sudden shift in investor sentiment could quickly challenge the current bullish narrative surrounding TASE shares.

Find out about the key risks to this Tel-Aviv Stock Exchange narrative.

Another View: What Does the SWS DCF Model Say?

For a different perspective, our DCF model points to significant downside. TASE shares are currently trading well above the calculated fair value of ₪9.08. This suggests the market’s strong optimism may have run ahead of the business’s cash flow fundamentals. Which valuation approach will ultimately prove correct?

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 Tel-Aviv Stock Exchange 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 843 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 Tel-Aviv Stock Exchange Narrative

If you have a different view or want to dig deeper into the figures, you can craft your own analysis in just a few minutes. Do it your way

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Tel-Aviv Stock Exchange.

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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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