Afcon Holdings (TASE:AFHL) Earnings Strength Keeps Undervaluation In Focus
- AFHL.TA
Afcon Holdings (TASE:AFHL) released its Q2 and first half 2026 results on 19 August, reporting higher sales, net income and earnings per share compared with the same periods in 2025.
Afcon Holdings shares closed at ₪525.4 on 27 August, with the stock giving up some ground over the past week and month even after the earnings release, yet still showing a strong 90 day share price return of 19.38% and a very large 1 year total shareholder return of 154.55%.
Compare Afcon Holdings’ recent earnings momentum with a curated set of capital projects and infrastructure stocks using the <a href="https://simplywall.st/discover/investing-ideas/473750/power-grid-technology-stocks/global?utm_medium=finance_user&utm_campaign=cta_screener_power_grid&utm_source=yahoo&blueprint=4730582″ rel=”nofollow noopener” target=”_blank”>38 power grid technology and infrastructure stocks as a starting point.
Afcon Holdings is now up sharply over the past year while still showing a sizeable gap between its recent price and some fair value estimates. How tight does that gap look once the valuation is broken down?
Price to Earnings of 31x: Is it justified for Afcon Holdings?
Afcon Holdings is trading on a P/E of 31x, while our SWS DCF model estimates a future cash flow value of ₪1,732.78 per share versus the last close at ₪525.4. That combination points to a valuation picture that looks very different depending on which lens you use.
The P/E ratio compares the current share price to earnings per share. For Afcon Holdings, a 31x P/E suggests investors are currently paying ₪31 for every ₪1 of recent earnings. In construction and capital projects, where earnings can be cyclical and tied to project pipelines, this ratio is often used as a quick shorthand for how the market is pricing current profitability.
On one hand, Afcon Holdings has earnings growth of 42.6% over the past year, ahead of its 11.7% per year average over the past 5 years, along with higher net profit margins of 5.5% compared with 3.9% last year and a description of high quality earnings. On the other hand, Return on Equity of 14.4% is flagged as low by the framework being used, and the company carries a high level of debt that is funded entirely by what is described as higher risk sources of borrowing. That mix can help explain why the market P/E of 31x is below some peers even with strong recent profit growth.
Compared with the IL Construction industry average P/E of 34.3x, Afcon Holdings is described as good value on a relative earnings basis, and also looks inexpensive against a peer group average P/E of 102x. If the SWS DCF model fair value of ₪1,732.78 eventually proves closer to the market view, that is a very wide gap for investors to weigh against the current multiple.
