Grupo Aeroportuario del Pacífico, S.A.B. de C.V.'s (BMV:GAPB) Business Is Yet to Catch Up With Its Share Price

With a price-to-earnings (or "P/E") ratio of 18.3x Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (BMV:GAPB) may be sending very bearish signals at the moment, given that almost half of all companies in Mexico have P/E ratios under 12x and even P/E's lower than 6x are not unusual. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so lofty.

Grupo Aeroportuario del Pacífico. de could be doing better as its earnings have been going backwards lately while most other companies have been seeing positive earnings growth. It might be that many expect the dour earnings performance to recover substantially, which has kept the P/E from collapsing. If not, then existing shareholders may be extremely nervous about the viability of the share price.

See our latest analysis for Grupo Aeroportuario del Pacífico. de

Keen to find out how analysts think Grupo Aeroportuario del Pacífico. de's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Grupo Aeroportuario del Pacífico. de's Growth Trending?

In order to justify its P/E ratio, Grupo Aeroportuario del Pacífico. de would need to produce outstanding growth well in excess of the market.

If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 1.4%. However, a few very strong years before that means that it was still able to grow EPS by an impressive 198% in total over the last three years. So we can start by confirming that the company has generally done a very good job of growing earnings over that time, even though it had some hiccups along the way.

Looking ahead now, EPS is anticipated to climb by 16% each year during the coming three years according to the analysts following the company. That's shaping up to be similar to the 15% each year growth forecast for the broader market.

With this information, we find it interesting that Grupo Aeroportuario del Pacífico. de is trading at a high P/E compared to the market. Apparently many investors in the company are more bullish than analysts indicate and aren't willing to let go of their stock right now. These shareholders may be setting themselves up for disappointment if the P/E falls to levels more in line with the growth outlook.

The Key Takeaway

It's argued the price-to-earnings ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

Our examination of Grupo Aeroportuario del Pacífico. de's analyst forecasts revealed that its market-matching earnings outlook isn't impacting its high P/E as much as we would have predicted. Right now we are uncomfortable with the relatively high share price as the predicted future earnings aren't likely to support such positive sentiment for long. This places shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Grupo Aeroportuario del Pacífico. de that you need to be mindful of.

If P/E ratios interest you, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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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.