Grupo Aeroportuario del Sureste, S. A. B. de C. V.'s (BMV:ASURB) Share Price Not Quite Adding Up

With a median price-to-earnings (or "P/E") ratio of close to 12x in Mexico, you could be forgiven for feeling indifferent about Grupo Aeroportuario del Sureste, S. A. B. de C. V.'s (BMV:ASURB) P/E ratio of 12.4x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/E.

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With earnings growth that's superior to most other companies of late, Grupo Aeroportuario del Sureste S. A. B. de C. V has been doing relatively well. It might be that many expect the strong earnings performance to wane, which has kept the P/E from rising. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

Check out our latest analysis for Grupo Aeroportuario del Sureste S. A. B. de C. V

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Grupo Aeroportuario del Sureste S. A. B. de C. V.

Is There Some Growth For Grupo Aeroportuario del Sureste S. A. B. de C. V?

The only time you'd be comfortable seeing a P/E like Grupo Aeroportuario del Sureste S. A. B. de C. V's is when the company's growth is tracking the market closely.

Taking a look back first, we see that the company grew earnings per share by an impressive 30% last year. Pleasingly, EPS has also lifted 93% in aggregate from three years ago, thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing earnings over that time.

Shifting to the future, estimates from the analysts covering the company suggest earnings should grow by 4.4% each year over the next three years. Meanwhile, the rest of the market is forecast to expand by 13% each year, which is noticeably more attractive.

In light of this, it's curious that Grupo Aeroportuario del Sureste S. A. B. de C. V's P/E sits in line with the majority of other companies. It seems most investors are ignoring the fairly limited growth expectations and are willing to pay up for exposure to the stock. Maintaining these prices will be difficult to achieve as this level of earnings growth is likely to weigh down the shares eventually.

The Bottom Line On Grupo Aeroportuario del Sureste S. A. B. de C. V's P/E

Generally, our preference is to limit the use of the price-to-earnings ratio to establishing what the market thinks about the overall health of a company.

We've established that Grupo Aeroportuario del Sureste S. A. B. de C. V currently trades on a higher than expected P/E since its forecast growth is lower than the wider market. When we see a weak earnings outlook with slower than market growth, we suspect the share price is at risk of declining, sending the moderate P/E lower. This places shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.

You should always think about risks. Case in point, we've spotted 1 warning sign for Grupo Aeroportuario del Sureste S. A. B. de C. V you should be aware of.

Of course, you might find a fantastic investment by looking at a few good candidates. So take a peek at this free list of companies with a strong growth track record, trading on a low P/E.

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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.