Growing Air Travel Will Drive Composite And eVTOL Expansion

Key Takeaways

• FACC's expertise in advanced composites and recognition as a top supplier position it for higher-margin, recurring revenues and long-term profit expansion.
  
• Strategic moves into expanding markets and operational efficiency initiatives drive diversified growth and higher, more resilient profitability.
  
• Exposure to supply chain strains, reliance on major customers, and persistent industry headwinds threaten sustained earnings growth and constrain financial flexibility.

Catalysts

Engages in the development, production, and maintenance of aircraft components worldwide.

• Analyst consensus sees FACC's production ramp-up as a clear growth driver, but this likely understates the potential-order backlogs and OEM guidance point to production rates not just doubling but possibly seeing multi-year prolonged high utilization, which could structurally lift annual revenues and earnings beyond current expectations.
  
• While analysts broadly point to technology and innovation leading to incremental contract wins, FACC's leading-edge composite expertise and top-tier supplier status (demonstrated by Aero Excellence certification and JEC recognition) make it a frontrunner for sole-source contracts on next-gen aircraft, creating a long tail of higher-margin, recurring revenue and sustained net margin expansion.
  
• FACC's advanced composite product portfolio positions it as a primary beneficiary of accelerating fleet renewal cycles as airlines and OEMs comply with global emissions mandates; this shift to lighter, more fuel-efficient aircraft is set to generate outsized component sales growth and significant step-changes in long-term revenue.
  
• The company's expansion into urban air mobility (eVTOL), drones, and space applications is moving from pilot phase to commercialization, creating diversified high-growth revenue streams that could represent a meaningful share of overall sales and resilience in earnings, even if commercial aircraft cycles moderate.
  
• The continued digital transformation and process automation within FACC's operations-combined with highly successful free cash flow and inventory efficiency initiatives-lays the groundwork for structurally higher profitability, enabling margin uplift and robust cash generation that can be reinvested for accelerated growth.

FACC Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on FACC compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming FACC's revenue will grow by 9.7% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 0.4% today to 5.7% in 3 years time.
• The bullish analysts expect earnings to reach €68.9 million (and earnings per share of €1.5) by about July 2028, up from €3.3 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 10.0x on those 2028 earnings, down from 99.5x today. This future PE is lower than the current PE for the GB Aerospace & Defense industry at 98.6x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.47%, as per the Simply Wall St company report.

FACC Future Earnings Per Share Growth

Risks

• Heightened geopolitical instability and the ongoing risk of escalating tariffs between the United States and other markets may drive up customers' costs and put pressure on FACC's pricing power, which over time could soften demand from major markets and negatively impact long-term revenue.
  
• FACC remains highly dependent on a few large OEMs, such as Airbus and Boeing, for the vast majority of its sales, meaning any downturns, order deferrals, or loss of major contracts from these customers could materially disrupt order flow and lead to revenue volatility.
  
• Despite near-term growth signals, the commercial aerospace sector continues to ramp up at a slower pace than pre-2018 levels, which, combined with the long-term trend of increased use of virtual meetings and less business travel, could undermine the anticipated order book recovery and cap top line growth.
  
• Elevated material costs and continued supply chain challenges, especially in the aerostructures division, are leading to squeezed net margins and lower EBIT, as seen in Q1 2025 results where EBIT margin dropped to 1.9 percent despite higher revenues, raising concerns about the company's ability to sustainably improve earnings.
  
• The company's need for ongoing investment in R&D and high capital expenditures to maintain competitiveness in lightweight composites risks keeping its capital intensity high, which may restrain free cash flow and limit the ability to return capital to shareholders in the long run.

Valuation

• The assumed bullish price target for FACC is €12.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of FACC's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €12.0, and the most bearish reporting a price target of just €7.4.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €1.2 billion, earnings will come to €68.9 million, and it would be trading on a PE ratio of 10.0x, assuming you use a discount rate of 8.5%.
• Given the current share price of €7.09, the bullish analyst price target of €12.0 is 40.9% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.