IES Holdings (IESC): Examining Valuation After Recent Share Price Momentum

IES Holdings (IESC) has seen its stock make notable moves recently, catching the eye of many investors. Over the past month, shares have jumped 11%, reflecting growing interest and some solid momentum behind the company.

See our latest analysis for IES Holdings.

After a banner year that saw IES Holdings post a remarkable 94% total shareholder return, the company’s momentum has only accelerated lately. An 11% rally over the past month and a year-to-date share price return edging toward triple digits suggest renewed confidence from investors, whether that is based on growth potential or a shifting view of the company’s prospects in its sector.

If IES Holdings’ recent surge got your attention, this could be the moment to broaden your search and discover fast growing stocks with high insider ownership

With IES Holdings’ shares nearing new highs and its price just shy of analyst targets, the key question emerges: is there value left to unlock here, or has the market already priced in its future growth?

Price-to-Earnings of 30x: Is it justified?

With IES Holdings currently trading at a price-to-earnings (P/E) ratio of 30x, the shares appear undervalued compared to both industry peers and the company's own fair value estimates.

The price-to-earnings ratio measures how much investors are willing to pay for each dollar of company earnings. In the construction sector, this metric is crucial because it highlights investor expectations for future growth, profitability, and risk relative to competitors. For IES Holdings, a 30x multiple signals some optimism, but the number is actually lower than what is typical for this industry right now.

What makes this P/E stand out? IES Holdings’ earnings are growing faster than both its industry and the broader US market, so the market could be underappreciating its strong earnings outlook. Notably, the company’s current P/E is below the US Construction industry average of 36x and the peer group average of 39.9x. This underscores attractive value. Additionally, regression analysis suggests a fair P/E closer to 42.9x, a level markets could ultimately price in if strong fundamentals persist.

Explore the SWS fair ratio for IES Holdings

Result: Price-to-Earnings of 30x (UNDERVALUED)

However, continued market optimism could fade if sector-wide demand cools or if IES Holdings does not maintain its robust earnings growth trajectory.

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

Another View: What Does the DCF Model Say?

Alongside multiples, our DCF model offers another lens. According to this approach, IES Holdings is trading around 2.7% below its estimated fair value. This signals just a modest margin of undervaluation. Does this support the optimism seen in recent price gains, or is the advantage less compelling than it appears?

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 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 would rather dive into the numbers on your own and build a perspective that matches your research, you can easily get started and 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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