Reassessing IES Holdings (IESC) Valuation After Earnings Beat, Data Center Momentum and Gulf Island Deal

IES Holdings (IESC) just delivered a strong one two punch, beating expectations on fourth quarter and full year results while announcing the Gulf Island Fabrication acquisition, and investors are now reassessing what this data center driven story is worth.

See our latest analysis for IES Holdings.

That backdrop helps explain why, even after a 3.69% one day share price pullback, IES Holdings still boasts a 26.17% one month share price return and a towering 1,527.16% three year total shareholder return. This suggests momentum is very much intact.

If this kind of data center fueled run has your attention, it could be a good moment to see what else is surging and explore fast growing stocks with high insider ownership.

With shares now trading above analyst targets after a massive multi year run, investors face a key question: is IES Holdings still undervalued on its data center and Gulf Island upside, or is the market already pricing in years of growth?

Price-to-Earnings of 30.1x: Is it justified?

On a price-to-earnings basis, IES Holdings trades at 30.1 times earnings, and the latest close of $460.16 reflects that premium versus many peers.

The price-to-earnings ratio links today’s share price to the company’s current profitability. This makes it a key yardstick for a steadily growing, cash generative construction and infrastructure services group like IES Holdings.

Relative to the broader US Construction industry, IES Holdings looks slightly inexpensive with its 30.1 times earnings multiple sitting below the sector average of 32.3 times. This hints that the market is not assigning a frothy sector level premium to its earnings despite strong data center and infrastructure momentum.

However, compared with a closer peer set, that same 30.1 times earnings ratio stands well above the peer average of 22.8 times. It still sits under the estimated fair price-to-earnings level of 36.2 times, suggesting investors are already paying up for growth and quality, but could move the valuation higher if earnings continue to outpace expectations.

Explore the SWS fair ratio for IES Holdings

Result: Price-to-Earnings of 30.1x (ABOUT RIGHT)

However, this momentum could falter if data center spending normalizes or Gulf Island integration disappoints, which could pressure margins and challenge the current valuation premium.

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

Another View: DCF Points to a Richer Price

Our DCF model tells a different story, suggesting fair value around $398.43, below the current $460.16 share price. That implies IES Holdings may be overvalued on a cash flow basis and raises the question of how long momentum can outrun fundamentals.

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 908 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 dig into the numbers yourself and challenge this view, you can build a personalized IES Holdings story in minutes: Do it your way.

A great starting point for your IES Holdings research is our analysis highlighting 3 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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