Vinci Earnings: Broad-Based Sales Growth Highlights Its Defensiveness; Shares Cheap

Narrow-moat Vinci’s first quarter results reaffirm our investment thesis that the business provides investors with defensive growth at an undervalued price. First-quarter organic sales growth of 4% was broad-based across its operating segments, with the ongoing recovery in its airports business making it the standout division. Its order backlog is at a record high and provides visibility into 14 months of revenue, which adds to the defensiveness of its concessions business. While no operating profit details were provided, we anticipate its record order book will allow Vinci to be selective about future construction and energy projects, which combined with increasing customers at its airports division will help deliver margin expansion. Shares are trading at a 15% discount to our EUR 133 fair value estimate, which we maintain.