IES Holdings (IESC): Evaluating the Stock’s Valuation After a Strong Year-to-Date Surge

IES Holdings (IESC) shares have been on a rollercoaster ride recently, catching the attention of market watchers. Over the past month, the stock has dipped 7%, but it remains up a striking 72% year to date, sparking plenty of investor curiosity.

See our latest analysis for IES Holdings.

IES Holdings’ latest share price swings have come after a year of robust momentum. The 71.5% year-to-date share price return stands out as one of the strongest performances in the sector. While volatility has crept in recently, the company’s staggering 976% total shareholder return over three years points to powerful long-term value creation, even as some investors reassess growth versus risk at these levels.

If the surge in IES Holdings has you rethinking what’s possible, it could be a smart move to broaden your search and discover fast growing stocks with high insider ownership.

With such explosive gains this year, the big question now is whether IES Holdings is trading below its true value or if the stock's recent run means future growth is already built into the price. Investors are left to wonder if there's still an opportunity to buy in or if the market has already accounted for the company's prospects.

Price-to-Earnings of 27x: Is it justified?

IES Holdings is currently trading at a price-to-earnings (P/E) ratio of 27x, which positions the stock as offering stronger value than many of its direct competitors and the broader industry, based on the latest closing price of $359.63.

The price-to-earnings ratio is a vital metric in evaluating companies like IES Holdings, reflecting how much investors are willing to pay today for a dollar of future earnings. In sectors like construction and capital goods, the P/E can capture market sentiment regarding a company's profitability and future outlook, helping to benchmark value against peers.

At 27x, IES Holdings is priced lower than the US Construction industry average of 33.1x and the peer average of 34x. This suggests that despite its substantial growth and robust returns, the market is not applying a premium valuation and could be underestimating the company’s future earning potential. Additionally, the current P/E is materially below the estimated fair P/E ratio of 42.5x, highlighting room for upward adjustment should investor sentiment shift.

Explore the SWS fair ratio for IES Holdings

Result: Price-to-Earnings of 27x (UNDERVALUED)

However, risks remain if revenue growth slows or if market sentiment changes. These factors could potentially put pressure on IES Holdings’ current valuation and recent momentum.

Find out about the key risks to this IES Holdings narrative.

Another View: Discounted Cash Flow Perspective

Looking at IES Holdings through the lens of our DCF model offers a fresh angle. The SWS DCF suggests the shares are trading about 10.5% below their fair value estimate, which may indicate potential undervaluation. However, it is worth considering whether the DCF fully captures the risks and future growth reflected in the recent price.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out IES Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 899 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own IES Holdings Narrative

If you have a different perspective or want to dig into the numbers yourself, you can build a personalized view in just a few minutes. Do it your way.

A great starting point for your IES Holdings research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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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.

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