Centuri Holdings (CTRI): Assessing Valuation as Profitability Improves and Shares Move Sideways

Centuri Holdings (CTRI) has caught investor attention recently, with its stock sliding slightly despite a healthy 33% total return over the past year. The company’s annual net income growth stands out and shows signs of improving profitability, even as revenue growth remains steady.

See our latest analysis for Centuri Holdings.

Centuri’s share price has drifted sideways in recent months, reflecting a market that is weighing its steady revenue growth and improving profitability. While the 1-year total shareholder return stands at a strong 33%, recent price action suggests investor momentum is pausing as the broader outlook is reassessed.

If you are looking to spot the next big movers, this is a perfect time to broaden your perspective and uncover fast growing stocks with high insider ownership

With profitability accelerating and shares still trading below analyst targets, is Centuri undervalued at current levels, or has the market already factored in its future growth potential and left limited upside for new investors?

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

With Centuri Holdings currently trading at a price-to-sales ratio of 0.7x, the stock appears attractively valued compared to both its industry and peer group. This comes despite recent volatility around the last close of $20.67.

The price-to-sales ratio measures the company's market capitalization relative to its annual revenue. This offers a broad view of how investors value each dollar of sales. For construction sector companies, where earnings can be volatile, this multiple provides important insight into market sentiment on top-line stability and future growth potential.

Centuri's 0.7x price-to-sales ratio is less than half the US Construction industry average of 1.5x and also below its direct peer average of 1.2x. This suggests that the market may be underestimating Centuri's revenue prospects or has yet to price in its expected turnaround to profitability.

If the market gravitates towards the estimated fair price-to-sales ratio of 0.7x, Centuri would be trading right at the benchmark valuation.

Explore the SWS fair ratio for Centuri Holdings

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

However, risk factors such as Centuri’s negative net income and recent share price weakness could undermine the case for a swift valuation rebound.

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

Another View: What Does Our DCF Model Say?

While the price-to-sales ratio points to Centuri Holdings being undervalued, our DCF model offers a note of caution. According to this cash flow-based approach, Centuri appears overvalued, as its current price is above our estimated fair value. Could future cash flows justify paying more? Or is the market getting ahead of itself?

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 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 see the numbers differently or want to dive deeper into Centuri's fundamentals, you can easily shape your own insights and perspective in just a few minutes, Do it your way

A good starting point is our analysis highlighting 1 key reward investors are optimistic about regarding Centuri Holdings.

Looking for more investment ideas?

Don’t settle for what everyone else is watching. Take action now and unlock investment opportunities most investors overlook using the Simply Wall Street Screener.

• Supercharge your portfolio growth by targeting these 909 undervalued stocks based on cash flows with untapped upside and solid fundamentals.
• Position yourself ahead of megatrends and capture the momentum with these 24 AI penny stocks that are shaping tomorrow’s markets.
• Boost your passive income with these 19 dividend stocks with yields > 3% that consistently deliver attractive yields above 3%.

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