BIG Shopping Centers (TASE:BIG): Exploring Valuation After Mixed Third Quarter Earnings and Higher Sales

BIG Shopping Centers (TASE:BIG) just released its third quarter and nine-month earnings, showing higher sales than last year. The results reveal a dip in quarterly profit, along with an uptick in year-to-date net income.

See our latest analysis for BIG Shopping Centers.

BIG Shopping Centers’ 1-year total shareholder return stands out at 63.3%, with the share price up more than 36% so far this year. The latest earnings update, which shows rising sales but mixed profits, has likely kept investor momentum strong following a significant multi-year run.

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But with earnings presenting a mixed story and shares already notching strong gains this year, is BIG Shopping Centers currently undervalued, or is the market already accounting for its future growth prospects, leaving little room for upside?

Price-to-Earnings of 10.8x: Is it justified?

BIG Shopping Centers is trading at a price-to-earnings (PE) ratio of 10.8x, placing it at a discount compared to its industry peers. This suggests the market may be underestimating its recent growth. The last closing price was ₪737.2, indicating a lower valuation relative to both the sector and competitors.

The price-to-earnings ratio measures how much investors are willing to pay for each shekel of earnings generated by the company. This is particularly important for a real estate operator whose earnings have risen sharply this year, as it helps investors determine whether the current valuation reflects expectations of further growth.

At 10.8x earnings, BIG is valued more attractively than the Israeli Real Estate industry average of 14.3x and the sector peer average of 13.3x. This significant discount compared to peers may reflect conservative market expectations or could represent an opportunity if recent profit acceleration continues.

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

Result: Price-to-Earnings of 10.8x (UNDERVALUED)

However, investor optimism could be tested by future earnings volatility or unexpected changes in the real estate market environment.

Find out about the key risks to this BIG Shopping Centers narrative.

Another View: Discounted Cash Flow Model Signals Caution

While the price-to-earnings approach points to undervaluation, the SWS DCF model indicates a different perspective. According to our DCF estimate, BIG Shopping Centers is currently trading above its calculated fair value, suggesting the stock might be priced a bit too high for cautious value seekers. If the earnings boost is driven by temporary factors, this could mean the recent price surge is at risk.

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 BIG Shopping Centers 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 921 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 BIG Shopping Centers Narrative

If you want to draw your own conclusions or have a different perspective, you can dive into the numbers and craft your own story in just a few minutes, so why not Do it your way.

A great starting point for your BIG Shopping Centers research is our analysis highlighting 2 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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