Vinci Earnings: Flat Third-Quarter Revenue Is No Cause for Concern; Shares Undervalued

Narrow-moat Vinci reported a mere 1% revenue growth (0% organic) during the third quarter, missing FactSet consensus by roughly 3%. The phasing out of several major projects in its Construction and Cobra IS segments was enough to offset 5% organic revenue growth across Vinci's concession businesses. We don't view there to be any fundamental cause for concern of its more cyclical segments and point to Vinci's order backlog growth of 9% year to date to assure investors. Shares appear cheap, currently trading at a 20% discount to our EUR 133 fair value estimate, which we maintain. The market remains concerned about the political risk the business faces, with the French government considering imposing another corporate tax charge.