Is Airbus Still Attractive After New Orders and Strong Multi Year Share Price Gains?

• If you have ever wondered whether Airbus is still a buy after its strong multiyear run, this breakdown will help you evaluate whether the current price still makes sense for long term investors.
• The stock is down around 1.4% over the last week and 8.5% over the past month, but it is still up 21.2% year to date and about 23.8% over the last year, continuing a multiyear climb of 86.1% over 3 years and 133.3% over 5 years.
• Recent headlines have focused on Airbus securing new aircraft orders and expanding its production capacity to meet sustained demand in commercial aviation. This reinforces the narrative that the order book remains robust. At the same time, ongoing discussions about supply chain bottlenecks and delivery schedules have kept risk perceptions in play, which helps explain some of the recent share price volatility.
• On our framework Airbus scores a 5 out of 6 on valuation, suggesting it screens as undervalued on most of our checks. You can see the full breakdown in its valuation score. Next we will look at the usual valuation approaches and then explore a more holistic way of thinking about what the market might really be pricing in.

Find out why Airbus's 23.8% return over the last year is lagging behind its peers.

Approach 1: Airbus Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth by projecting the cash it can generate in the future and discounting those cash flows back to today using a required rate of return.

For Airbus, the latest twelve month Free Cash Flow is about €3.8 billion. Analysts expect this to rise steadily as aircraft deliveries scale, with Simply Wall St extending those analyst forecasts beyond the usual 5 year window. Under this two stage Free Cash Flow to Equity approach, projected free cash flow grows to roughly €11.5 billion by 2029 and continues to increase into the next decade as the order book is converted into cash.

When all those future cash flows are discounted back to today, the model arrives at an intrinsic value of about €461.53 per share. Compared with the current market price, this implies Airbus trades at roughly a 58.0% discount to its estimated fair value, suggesting investors are pricing in materially weaker cash flow or higher risk than the model assumes.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Airbus is undervalued by 58.0%. Track this in your watchlist or portfolio, or discover 907 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Airbus.

Approach 2: Airbus Price vs Earnings

For profitable businesses like Airbus, the Price to Earnings ratio is a useful shorthand for how much investors are willing to pay for each euro of current earnings. It naturally reflects expectations for future growth and the risk investors see in those earnings, so higher growth and lower perceived risk usually justify a higher PE, while slower or riskier earnings streams tend to trade on lower multiples.

Airbus currently trades on a PE of about 30.2x. That is below the broader Aerospace and Defense industry average of roughly 46.7x and also under the peer average of around 35.9x, suggesting the market is applying a discount to Airbus relative to many listed peers. Simply Wall St’s Fair Ratio, at about 34.5x, is a proprietary estimate of what a reasonable PE for Airbus should be, given its earnings growth outlook, profitability, size, industry positioning and specific risk profile.

Because the Fair Ratio explicitly blends these fundamentals instead of relying on blunt peer and industry comparisons, it serves as a more tailored benchmark for Airbus. With the stock trading below this Fair Ratio, the PE perspective indicates that Airbus still appears attractively valued.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1448 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Airbus Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, an easy tool on Simply Wall St’s Community page that lets you turn your view of Airbus into a clear story linked to a financial forecast and a fair value. You can see, for example, how a bullish investor who expects faster production ramp ups, stronger margins and a fair value closer to €240 might reach a very different buy or hold decision than a more cautious investor who bakes in persistent supply chain issues, lower earnings nearer €6.1 billion and a fair value closer to €140. They can then compare those dynamic fair values with today’s share price as news, earnings and guidance updates automatically flow into their Narrative over time.

Do you think there's more to the story for Airbus? Head over to our Community to see what others are saying!

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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