Equital (TASE:EQTL) Valuation Check After Mixed Earnings: Higher Sales but Lower Profits

Equital (TASE:EQTL) just released third quarter results that mix higher sales with lower revenue and earnings, a combination that tends to make investors pause and ask what is really driving profitability.

See our latest analysis for Equital.

The latest earnings update seems to have cooled sentiment a little, with the 1 day share price return slipping even as the 90 day share price return of 6.38% and 5 year total shareholder return of 103.36% still point to longer term momentum rather than a sharp reversal.

If this mixed quarter has you reassessing opportunities in energy and infrastructure linked names, it could be a good moment to broaden your search and explore fast growing stocks with high insider ownership.

With the shares trading at a steep discount to some intrinsic value estimates despite softer earnings, investors now face a pivotal question: is Equital a mispriced opportunity, or is the market already baking in its future growth?

Price-to-Earnings of 13.1x: Is it justified?

Equital's latest close at ₪155 lines up with a price-to-earnings ratio of 13.1x, which screens as modestly undervalued against both peers and the wider industry.

The price-to-earnings multiple compares the current share price with the company’s earnings per share. It is a straightforward way to gauge how much investors are willing to pay for each unit of profit. For a diversified oil, gas, and infrastructure group like Equital, this lens helps frame whether the market is adequately recognizing its earnings resilience.

Right now, the market is paying slightly less for Equital’s profits than for the average Asian oil and gas name, and meaningfully less than for its closest listed peers. Its 13.1x P/E sits below the 13.6x industry average and well under the 17.1x peer average. This implies investors are not fully pricing in its recent earnings growth outpacing a broadly negative sector backdrop.

Viewed against that context, the discount looks significant. The P/E could drift closer to sector and peer levels if Equital sustains even modest profit growth and maintains its high quality earnings profile.

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

Result: Price-to-Earnings of 13.1x (UNDERVALUED)

However, softer revenue trends and exposure to cyclical property and energy markets could quickly undermine the apparent valuation discount if conditions deteriorate.

Find out about the key risks to this Equital narrative.

Another View: DCF Points to Deeper Undervaluation

While the 13.1x earnings multiple already looks modest, our DCF model paints an even starker picture, suggesting fair value around ₪440.55 per share versus today’s ₪155, a hefty 64.8% discount. Is the market overlooking Equital’s cash flow potential, or is the model too optimistic?

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 Equital 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 919 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 Equital Narrative

If you see the numbers differently, or want to test your own assumptions, you can build a customised view in just a few minutes: Do it your way.

A great starting point for your Equital research is our analysis highlighting 2 key rewards and 2 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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