Centuri Holdings (CTRI): Evaluating Valuation Following Leadership Change in Key U.S. Gas Division

Centuri Holdings recently named Ryan Palazzo as President of its U.S. Gas segment, a division that generates about half of the company’s overall revenue. Investors are watching how his industry experience could influence Centuri’s next phase.

See our latest analysis for Centuri Holdings.

Centuri Holdings has seen its share price climb 7.1% year-to-date, while the total shareholder return over the past twelve months is a solid 12%. The momentum is encouraging, especially as news of Ryan Palazzo’s appointment adds confidence about future execution in its core U.S. Gas segment. This development could shift investor perceptions around growth and operational expertise.

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With shares up in 2024 and key leadership changes underway, investors may wonder if Centuri Holdings is still trading at an attractive discount or if the market has already factored in all of its expected growth.

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

Centuri Holdings currently trades at a price-to-sales ratio of 0.7x, which puts its valuation in focus compared to both its peers and the broader industry. At the last close price of $20.58, the company appears attractively valued relative to competitors.

The price-to-sales ratio measures how much investors are willing to pay for each dollar of Centuri Holdings’ annual sales. This is a widely used metric for companies that are not yet consistently profitable or are in sectors where earnings are volatile. For Centuri Holdings, with unsteady profits and forecasted growth, this ratio is particularly relevant.

At 0.7x, Centuri’s price-to-sales ratio is not only below the US Construction industry average of 1.4x, but is also under the peer group’s 1.3x average. Even when benchmarked against an estimated fair ratio of 0.7x, the company sits at a level the broader market may eventually recognize as fair value. This comparison highlights a potential value opportunity if the company delivers on its projected growth and successfully navigates its current unprofitable status.

Explore the SWS fair ratio for Centuri Holdings

Result: Price-to-Sales of 0.7x (ABOUT RIGHT)

However, ongoing net losses and volatile industry conditions could still challenge Centuri Holdings’ ability to fully realize its growth potential in the near term.

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

Another View: Discounted Cash Flow Model

Looking at Centuri Holdings through the lens of our DCF model paints a different picture. The shares are currently trading above our estimate of fair value, which suggests a potential premium in the current price. Does this mean the market is too optimistic about near-term growth, or is something else at play?

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 want to dig into the details or approach things from your perspective, it only takes a few minutes to build your own view. Do it your way

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

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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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