Is Afcon Holdings (TASE:AFHL) Undervalued On Strong First Half 2026 Earnings?

Afcon Holdings earnings highlight a stronger first half of 2026

Afcon Holdings (TASE:AFHL) has drawn fresh attention after reporting Q2 2026 and first half results, with higher sales, net income and earnings per share from continuing operations compared with the same periods in 2025.

See our latest analysis for Afcon Holdings.

The earnings release on 19 August comes after a strong period for Afcon Holdings, with the share price up 20.52% over 90 days and a year to date share price return of 57.02%. The 1 year total shareholder return of 169.96% points to momentum that has built over a longer horizon.

If Afcon's recent move has you thinking about where else growth and infrastructure themes might appear, this is a good moment to scan the 39 power grid technology and infrastructure stocks

Bulls point to Afcon Holdings' earnings momentum and large intrinsic value gap. Bears highlight the sharp share price run over 2026. Which case looks stronger once the valuation numbers are on the table?

Price-to-earnings of 32.6x for Afcon Holdings: Is it justified?

On the latest figures, Afcon Holdings trades on a P/E of 32.6x, which sits slightly above the 30.6x average for the IL Construction industry but well below a 99.9x peer average.

The P/E ratio compares the current share price with earnings per share. For a company like Afcon Holdings, which operates in construction, infrastructure and related technologies, this multiple reflects what investors are currently willing to pay for each unit of earnings based on its profit profile.

Afcon Holdings has several factors that help frame this P/E. Earnings grew 42.6% over the past year and have grown by 11.7% per year over the past five years. The company also reports high quality earnings and an improved net profit margin of 5.5% compared with 3.9% last year. At the same time, the stock is flagged as trading at a 68.2% discount to an internal fair value estimate using the SWS DCF model, and the reported Return on Equity of 14.4% is described as low. This combination suggests the current P/E may reflect the recent acceleration in profit growth while still pricing in some caution around returns and balance sheet risk, including a high level of debt and reliance on higher risk funding sources.

Compared with the IL Construction industry average P/E of 30.6x, Afcon Holdings is described as expensive, which implies investors are assigning a premium to its earnings relative to the domestic sector. However, relative to a much higher peer average of 99.9x, Afcon Holdings is described as good value, which points to a considerably lower earnings multiple than some comparable companies. Without a calculated fair P/E ratio to indicate where the multiple could move over time, the picture is mixed and rests on how investors weigh the company’s recent earnings growth against its balance sheet and return profile.

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

Result: Price-to-earnings of 32.6x (ABOUT RIGHT)

However, Afcon Holdings still carries debt concerns and a relatively low Return on Equity, which could pressure the current P/E if funding conditions or project returns worsen.

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

Another view on Afcon Holdings valuation

The P/E ratio tells one story for Afcon Holdings, but the SWS DCF model points in a different direction. With the share price at ₪552.7 and the DCF fair value estimate at ₪1,736.67, the stock screens as deeply undervalued. Which signal do you treat as more important?

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

Given the mix of enthusiasm and caution around Afcon Holdings right now, it makes sense to look at the data yourself and act before sentiment shifts, then weigh the 2 key rewards and 2 important warning signs.

Looking for more investment ideas beyond Afcon Holdings?

If Afcon Holdings has sharpened your focus, do not stop here. Use the Simply Wall Street Screener to spot other opportunities before they move without you.

• Target stronger value by reviewing companies that appear mispriced on quality and fundamentals through the 267 high quality undervalued stocks.
• Strengthen your income stream by assessing stocks that feature higher yields and resilient payouts with the 423 dividend fortresses.
• Prioritise resilience by reviewing companies that pass strict balance sheet and risk filters using the 291 resilient stocks with low risk scores.

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