Grupo Aeroportuario del Centro Norte, S.A.B. de C.V.'s (BMV:OMAB) 27% Share Price Surge Not Quite Adding Up

Those holding Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (BMV:OMAB) shares would be relieved that the share price has rebounded 27% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. Looking further back, the 22% rise over the last twelve months isn't too bad notwithstanding the strength over the last 30 days.

In spite of the firm bounce in price, it's still not a stretch to say that Grupo Aeroportuario del Centro Norte. de's price-to-earnings (or "P/E") ratio of 14.6x right now seems quite "middle-of-the-road" compared to the market in Mexico, where the median P/E ratio is around 13x. 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 Centro Norte. de 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 Centro Norte. de

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Grupo Aeroportuario del Centro Norte. de.

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

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

Taking a look back first, we see that the company grew earnings per share by an impressive 29% last year. The latest three year period has also seen an excellent 207% overall rise in EPS, aided by its short-term performance. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth.

Turning to the outlook, the next three years should generate growth of 3.7% per year as estimated by the twelve analysts watching the company. That's shaping up to be materially lower than the 9.5% each year growth forecast for the broader market.

With this information, we find it interesting that Grupo Aeroportuario del Centro Norte. de 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. 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 Centro Norte. de's P/E

Its shares have lifted substantially and now Grupo Aeroportuario del Centro Norte. de's P/E is also back up to the market median. 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 Centro Norte. de's analyst forecasts revealed that its inferior earnings outlook isn't impacting its P/E as much as we would have predicted. 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.

Having said that, be aware Grupo Aeroportuario del Centro Norte. de is showing 3 warning signs in our investment analysis, and 1 of those shouldn't be ignored.

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.