Does Aptiv’s 2025 Valuation Reflect Its DCF Upside And EV Software Expansion?

• Wondering if Aptiv at around $76 is a smart buy or a value trap? You are not alone. This article will walk through what the numbers are really saying about the stock.
• The share price has slipped about 1.5% over the last week and 8.7% over the last month, but it is still up 26.7% year to date and 34.8% over the past year, even though the 3 year and 5 year returns remain negative at -18.1% and -37.5% respectively.
• Recent headlines around Aptiv have centered on its positioning in advanced vehicle electronics and software, along with strategic moves to deepen relationships with major automakers and expand its role in EV and autonomous driving ecosystems. Together, these developments have helped reshape how investors view its long term growth runway and competitive moat, even as the stock price has been choppy.
• Right now, Aptiv scores a 3/6 valuation check, suggesting it screens as undervalued on half of our core metrics. Next, we will unpack what different valuation approaches say about that score and hint at an even more insightful way to think about fair value by the end of this article.

Aptiv delivered 34.8% returns over the last year. See how this stacks up to the rest of the Auto Components industry.

Approach 1: Aptiv Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth by projecting the cash it can generate in the future, then discounting those cash flows back to today in dollar terms.

For Aptiv, the latest twelve month free cash flow is about $1.62 billion. Analysts and model assumptions see this rising steadily, with free cash flow projected to reach roughly $2.74 billion by 2035. This is based on a two stage Free Cash Flow to Equity model that first uses analyst estimates and then extrapolates growth over the longer term.

When all those future cash flows are discounted back, the model arrives at an estimated intrinsic value of about $160.59 per share. Compared with the current share price around $76, Aptiv appears roughly 52.4% undervalued on this DCF view. This indicates a substantial margin of safety if the cash flow projections prove accurate.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Aptiv is undervalued by 52.4%. Track this in your watchlist or portfolio, or discover 906 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 Aptiv.

Approach 2: Aptiv Price vs Earnings

For a profitable company like Aptiv, the price to earnings ratio is a practical way to gauge how much investors are paying for each dollar of current earnings. It naturally ties today’s share price to the company’s profitability, which is what ultimately needs to grow to justify higher valuations.

What counts as a “normal” or “fair” PE depends on how fast earnings are expected to grow and how risky those earnings are. Faster, more reliable growth usually supports a higher multiple, while slower or more uncertain earnings growth tends to pull it down.

Aptiv currently trades on a PE of about 55.94x, well above the Auto Components industry average of roughly 18.77x and also above its peer group average of about 34.67x. Simply Wall St’s proprietary Fair Ratio, which estimates what PE Aptiv should trade on after adjusting for its earnings growth outlook, industry, profit margins, market cap and risk profile, comes in lower at around 46.70x. Because this Fair Ratio bakes in company specific fundamentals rather than relying only on blunt peer or industry comparisons, it offers a more tailored view of value. On this basis, Aptiv’s current PE suggests the stock is somewhat overvalued relative to its fundamentals.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Aptiv Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. This is a simple framework on Simply Wall St’s Community page that lets you spell out your story for a company, translate that story into assumptions about future revenue, earnings and margins, and then see a dynamic fair value that you can compare with today’s share price to decide whether to buy, hold or sell. That valuation automatically updates as new news or earnings arrive and different investors can express very different views. For example, one bullish Aptiv Narrative focuses on the spin off of the Electrical Distribution Systems business, ADAS adoption and diversification into aerospace and industrial markets driving strong margin expansion and justifying a fair value closer to the most optimistic analyst target of about $98. A more cautious Narrative instead focuses on macro risks, China exposure and execution challenges around the separation and anchors closer to the bearish target near $60. Each Narrative clearly links its story, forecast and fair value so you can choose which version of the future you consider most reasonable.

Do you think there's more to the story for Aptiv? 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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