Centuri Holdings (CTRI): Assessing Valuation After $160 Million Equity Offering and New Underwriters

Centuri Holdings just wrapped up a $160 million follow-on equity offering and brought several new co-lead underwriters on board. Moves like this can shake up trading activity and get investors rethinking their positions.

See our latest analysis for Centuri Holdings.

Centuri Holdings has grabbed attention not only with its fresh capital raise but also by adding a roster of respected co-lead underwriters, a move that appears to have powered momentum in the share price, which is up 10.6% year-to-date. Although total shareholder return over the past year sits at just 2.6%, recent trading suggests investors may be warming to Centuri’s growth outlook after this event.

If you’re watching how leadership changes or capital moves can shift market sentiment, now is the perfect moment to broaden your scope and discover fast growing stocks with high insider ownership

But with shares now trading just below analyst targets and recent gains already reflected in the price, is Centuri still undervalued, or has the market already factored in all the upside from its latest moves?

Price-to-Sales of 0.7x: Is it justified?

Trading at a price-to-sales ratio of 0.7x, Centuri Holdings looks attractively valued relative to its US Construction peers and industry norms, given its last close of $21.25.

The price-to-sales multiple divides a company’s market value by its revenues, making it a useful metric for evaluating companies with low or variable profitability, such as those that have just turned profitable. For Centuri, this ratio suggests investors are paying less for each dollar of sales compared to rivals, which can be compelling for value-focused investors.

Centuri’s price-to-sales ratio not only falls below the peer average of 1x, but also stands well below the industry benchmark of 1.3x. The market is pricing Centuri’s future revenue at a considerable discount. Furthermore, our estimates place the fair price-to-sales ratio at 0.8x, so current trading levels are still under what the market could move toward with positive surprises or re-rating.

Explore the SWS fair ratio for Centuri Holdings

Result: Price-to-Sales of 0.7x (UNDERVALUED)

However, weak net income and thin margins remain concerns. As a result, any slowdown in revenue growth could quickly erode Centuri’s perceived valuation advantage.

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

Another View: SWS DCF Model Signals Overvaluation

While Centuri looks undervalued based on its price-to-sales ratio, our DCF model provides a different perspective. According to this approach, Centuri’s fair value sits at $18.91 per share, meaning the current price of $21.25 is actually above what the model suggests it is worth. Could the optimism seen in trading be overdone, or is the market seeing something our model does not?

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 Centuri 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 935 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 Centuri Holdings Narrative

If you have a different perspective or would rather draw your own conclusions, you can easily build a personal view in just a few minutes with Do it your way.

A great starting point for your Centuri Holdings research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Looking for More Smart Investment Opportunities?

Don’t let your next outperformer slip away. Take the lead by searching for unique opportunities in areas the market is buzzing about right now.

• Uncover up-and-comers driving advancements in healthcare innovation by checking out these 30 healthcare AI stocks.
• Boost your portfolio’s income potential by targeting stable returns from these 14 dividend stocks with yields > 3% with yields over 3%.
• Capitalize on revolutionary tech shifts with access to these 26 AI penny stocks that have the power to reshape entire industries.

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.

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