Unpleasant Surprises Could Be In Store For Grupo Aeroportuario del Pacífico, S.A.B. de C.V.'s (BMV:GAPB) Shares

There wouldn't be many who think Grupo Aeroportuario del Pacífico, S.A.B. de C.V.'s (BMV:GAPB) price-to-earnings (or "P/E") ratio of 13.1x is worth a mention when the median P/E in Mexico is similar at about 13x. Although, it's not wise to simply ignore the P/E without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

Recent times haven't been advantageous for Grupo Aeroportuario del Pacífico. de as its earnings have been rising slower than most other companies. One possibility is that the P/E is moderate because investors think this lacklustre earnings performance will turn around. If not, then existing shareholders may be a little nervous about the viability of the share price.

See our latest analysis for Grupo Aeroportuario del Pacífico. de

Want the full picture on analyst estimates for the company? Then our free report on Grupo Aeroportuario del Pacífico. de will help you uncover what's on the horizon.

Is There Some Growth For Grupo Aeroportuario del Pacífico. de?

In order to justify its P/E ratio, Grupo Aeroportuario del Pacífico. de would need to produce growth that's similar to the market.

Retrospectively, the last year delivered a decent 8.2% gain to the company's bottom line. Pleasingly, EPS has also lifted 412% in aggregate from three years ago, partly 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.

Turning to the outlook, the next three years should generate growth of 5.0% each year as estimated by the twelve analysts watching the company. That's shaping up to be materially lower than the 10% per annum growth forecast for the broader market.

In light of this, it's curious that Grupo Aeroportuario del Pacífico. de's P/E sits in line with the majority of other companies. Apparently many investors in the company are less bearish than analysts indicate and aren't willing to let go of their stock right now. Maintaining these prices will be difficult to achieve as this level of earnings growth is likely to weigh down the shares eventually.

The Final Word

Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

Our examination of Grupo Aeroportuario del Pacífico. de's analyst forecasts revealed that its inferior earnings outlook isn't impacting its P/E as much as we would have predicted. 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 2 warning signs for Grupo Aeroportuario del Pacífico. de 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.