Some Confidence Is Lacking In Grupo Aeroportuario del Sureste, S. A. B. de C. V.'s (BMV:ASURB) P/E

It's not a stretch to say that Grupo Aeroportuario del Sureste, S. A. B. de C. V.'s (BMV:ASURB) price-to-earnings (or "P/E") ratio of 13.1x right now seems quite "middle-of-the-road" compared to the market in Mexico, where the median P/E ratio is around 12x. While this might not raise any eyebrows, if the P/E ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

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. One possibility is that the P/E is moderate because investors think this strong earnings performance might be about to tail off. 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?

There's an inherent assumption that a company should be matching the market for P/E ratios like Grupo Aeroportuario del Sureste S. A. B. de C. V's to be considered reasonable.

Taking a look back first, we see that the company grew earnings per share by an impressive 19% last year. The latest three year period has also seen an excellent 331% overall rise in EPS, aided by its short-term performance. Therefore, it's fair to say the earnings growth recently has been superb for the company.

Shifting to the future, estimates from the analysts covering the company suggest earnings should grow by 9.7% per year over the next three years. That's shaping up to be materially lower than the 16% each year growth forecast for the broader market.

With this information, we find it interesting that Grupo Aeroportuario del Sureste S. A. B. de C. V is trading at a fairly similar P/E to the market. It seems most investors are ignoring the fairly limited growth expectations and are willing to pay up for exposure to the stock. These shareholders may be setting themselves up for future disappointment if the P/E falls to levels more in line with the growth outlook.

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

Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the 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. Right now we are uncomfortable with the P/E as the predicted future earnings aren't likely to support a more positive sentiment for long. This places shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.

Plus, you should also learn about this 1 warning sign we've spotted with Grupo Aeroportuario del Sureste S. A. B. de C. V.

If you're unsure about the strength of Grupo Aeroportuario del Sureste S. A. B. de C. V's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.