What Does the Recent Arcadis Stock Rally Mean for Its True Value in 2025?

If you are considering your next move with Arcadis stock, you are definitely not alone. The company's shares have had quite the ride lately, with a 15.6% boost over the past month and a modest 0.8% gain in the last week. While those recent green numbers might catch your eye, it stands out even more against the sharp drop of almost 20% year-to-date and a 25.1% slide in the past year. Yet, looking further back reveals something interesting. The stock is actually up 53.7% over three years and has multiplied more than twice over five years, up 162.3%. These shifting numbers suggest that investor sentiment and risk perceptions around Arcadis are on the move, maybe even starting to turn a corner.

Given these mixed signals, it is worth digging deeper into how Arcadis is really valued right now. The company just passed all six of the key valuation checks we use, giving it a perfect 6 out of 6 on our value score. That is not something we see every day and it sets Arcadis apart as a potentially undervalued stock with room for upside, or perhaps hidden risks. Let us break down these valuation methods to see what is really driving that rare perfect score. And stick around, because at the end of the article, I will show you an even more powerful way to get clarity on Arcadis’ true worth.

Why Arcadis is lagging behind its peers

Approach 1: Arcadis Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by forecasting its future cash flows and then discounting them back to their present value. This method gives investors a sense of what the business could be worth based solely on the cash it is likely to generate in years to come.

For Arcadis, the most recent Free Cash Flow (FCF) reported is €247.6 million. Analysts have provided annual free cash flow projections for the next several years, with estimates increasing to €412.9 million by 2029. Beyond this period, Simply Wall St extrapolates a further five years, bringing the projected FCF for 2035 to €485.7 million.

Using the two-stage Free Cash Flow to Equity approach, all future cash flows are discounted to today’s values. The result is an estimated intrinsic value per share of €112.24 for Arcadis. Based on this model, the stock is currently trading at a 57.9% discount to its intrinsic value, which suggests a significant margin of undervaluation according to this particular method.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Arcadis.

Our Discounted Cash Flow (DCF) analysis suggests Arcadis is undervalued by 57.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Arcadis Price vs Earnings

The Price-to-Earnings (PE) ratio is a popular valuation tool for profitable companies like Arcadis because it measures how much investors are willing to pay for each euro of the company’s earnings. It offers a quick reality check on whether a stock is cheap or expensive relative to its earnings power.

However, growth expectations and risk matter a lot when thinking about what a "normal" or "fair" PE ratio should be. Companies expected to grow faster, or companies viewed as safer bets, usually command higher PE ratios. In contrast, slower growth or additional risks tend to push the ratio down.

Arcadis currently trades at a PE ratio of 17.8x. To put this into perspective, the Professional Services industry average sits at 19.7x, and the average PE among Arcadis’s peers is even higher at 39.7x. On the surface, Arcadis looks less expensive than both its direct competitors and the broader industry, which could imply an opportunity.

This is where Simply Wall St’s proprietary “Fair Ratio” comes in. Unlike a basic comparison to peers or industry averages, the Fair Ratio uses a range of factors such as Arcadis’s earnings growth, margins, industry, market cap and risks to estimate what would be a justified PE multiple. For Arcadis, this Fair Ratio is 25.5x, which is well above its current 17.8x. This means the stock is trading at a discount even after you account for its specific fundamentals and risks, not just relative to generic benchmarks.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Arcadis Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is more than just a set of numbers; it is your personal investment story, based on what you believe about a company’s future, including your fair value estimate and assumptions about things like revenue, earnings, and margins. Narratives connect the company’s story with your forecasts, allowing you to see how those beliefs translate into a fair value and how they stack up against the current share price.

Simply Wall St’s Community page makes it easy to explore and create Narratives, helping millions of investors use both facts and perspective to make smarter decisions about when to buy or sell. The best part is Narratives are dynamic. When new information, such as the latest earnings or breaking news, comes in, your forecast and fair value are automatically updated. For example, one investor might be optimistic and set a Narrative fair value for Arcadis at €70.5 based on strong digital growth, while another might be more cautious, believing €47.0 is more appropriate due to market headwinds. Narratives empower you to make investment decisions based on your own perspective, while letting you compare those views to others in the community.

Do you think there's more to the story for Arcadis? Create your own Narrative to let the Community know!

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.

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