Afcon Holdings (TASE:AFHL) Posted Stronger Q2 Results, Is It Still Undervalued?

Afcon Holdings (TASE:AFHL) has drawn fresh attention after reporting second quarter 2026 results, with higher sales, net income, and earnings per share from continuing operations compared with the same period last year.

Afcon Holdings' recent earnings release and upcoming Q2 2026 earnings call have arrived after a strong run, with the share price at ₪536.3 and a year to date share price return of 52.36%. The 1 year total shareholder return of 154.88% and 3 year total shareholder return of 360.93% point to powerful longer term momentum even though the 30 day share price return is down 10.62%.

Scan past Afcon Holdings and see how other construction and infrastructure stocks with strong fundamentals are setting up right now through our hand picked list of solid balance sheet and fundamentals (427 results)

Afcon Holdings now trades at a sizeable discount to an estimated fair value, even after a strong run and a recent pullback. Is the market correctly pricing in risk, or has caution gone too far as the earnings improve?

Price-to-Earnings of 31.6x: Is it justified?

Afcon Holdings is priced at a P/E of 31.6x, which is lower than both its peer group on 102.3x and the wider IL Construction industry on 45.1x.

The P/E multiple compares the current share price with earnings per share and helps you see how much investors are paying for each unit of profit. For a construction and infrastructure group like Afcon Holdings, this is a straightforward way to weigh the current earnings profile against what the market is willing to pay.

Afcon Holdings has seen earnings grow by 42.6% over the past year, ahead of its 5 year average growth of 11.7% per year. The current P/E of 31.6x is also supported by high quality earnings and a return on equity of 14.4%, even though that return is flagged as low by the 20% benchmark used here.

Compared with the IL Construction industry average P/E of 45.1x and a peer average of 102.3x, the 31.6x multiple looks restrained. The market is assigning Afcon Holdings a lower earnings multiple than both its direct industry and broader peer group, despite the stronger recent earnings growth than the Construction industry, which reported a 5.3% decline.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 31.6x (UNDERVALUED)

However, Afcon Holdings still faces execution risk across its many business lines, and any shift in construction or infrastructure demand could quickly challenge the current valuation story.

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

Another view on Afcon Holdings using our DCF model

The earlier P/E comparison painted Afcon Holdings as restrainedly priced against peers. A second lens using our DCF model is more aggressive. At a share price of ₪536.3, Afcon Holdings screens as trading about 69.3% below an estimated future cash flow value of ₪1,746.82, which points to a very different margin of safety question for you.

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 Afcon 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 267 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

This mix of optimism and caution around Afcon Holdings raises a fair question. Look through the numbers, weigh the risks and rewards, and shape your own view with the 2 key rewards and 2 important warning signs.

Looking for more investment ideas beyond Afcon 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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