AAON (AAON): Assessing Valuation Following BASX Growth and Signs of Operational Stabilization

AAON (AAON) shares caught some positive momentum this week after recent company updates signaled that operational issues are evening out and the BASX division is on a growth path. The upbeat market mood, fueled by better-than-expected corporate earnings and improving macro conditions, also played a role in lifting the stock.

See our latest analysis for AAON.

AAON's latest rally follows a tough stretch this year, as the stock’s year-to-date share price return sits at -17.2% even after recent gains. However, momentum has shifted this quarter, with a 17.2% 90-day share price return and encouraging updates from its BASX segment helping recapture investors’ attention. Long-term holders have still seen strong compounding, with a three-year total shareholder return of 135.7%.

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This turnaround has some asking whether AAON is now trading below its true potential or if the stock’s recent rally means future growth is already reflected in the current price. This raises the question for investors: is there still a real buying opportunity?

Most Popular Narrative: 5.4% Undervalued

AAON's last close at $97.70 comes in slightly below the most popular narrative's fair value of $103.25, suggesting more upside in the eyes of analysts. This narrative accounts for recent operational improvements, sector tailwinds, and the company's strategic data center exposure.

The company is overcoming short-term operational disruptions related to its ERP rollout, with visible progress in production efficiency and a strong, favorably priced backlog. This supports expectations for accelerating top-line growth and margin recovery in the second half of 2025 and into 2026. Rapid growth in the data center market, driven by demand for advanced cooling solutions (liquid cooling, custom chillers), is fueling significant BasX brand order wins and partnerships such as Applied Digital. This positions AAON to capitalize on long-term technology and infrastructure spending.

Read the complete narrative.

Want to unlock what powers this high target? The foundation of this narrative is bold assumptions on margins and long-term growth, with a forecast PE that rivals some top tech names. Wondering what financial leap is needed to validate this valuation? Uncover the details behind these ambitious projections by exploring the full story.

Result: Fair Value of $103.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing operational inefficiencies and weaker demand in key segments could limit AAON's ability to deliver on these bullish expectations.

Find out about the key risks to this AAON narrative.

Another View: What Do the Multiples Say?

While the narrative and target price point to upside, a look at valuation ratios tells a different story. AAON trades at a price-to-earnings ratio of 65.2x, which is far above its industry peers at 20.8x and well beyond the fair ratio of 47.5x. This premium leaves little room for error if growth stalls. Is the market’s optimism running too hot, or is AAON’s edge worth the extra cost?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own AAON Narrative

If you’re looking to go deeper or put your own spin on the story, it only takes a few minutes to map out your own view, insights, and conclusions. Do it your way

A great starting point for your AAON research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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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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