AAON (AAON): Evaluating Valuation Following Strong BASX Demand and Upbeat Full-Year Guidance

AAON (AAON) delivered a strong quarter, with revenue and profit outpacing expectations thanks to demand for its BASX data center cooling solutions. Management also raised full-year sales growth guidance, pointing to continued operational momentum.

See our latest analysis for AAON.

AAON’s share price has bounced back in recent weeks, climbing over 27% in the past three months as investors reacted to upbeat guidance, a record backlog in the BASX segment, and new executive appointments. Even with this rally, the 12-month total shareholder return is still down 25%. This reflects earlier headwinds but also leaves space for longer-term optimism given the company’s 107% total return over three years.

If this turn in AAON’s momentum has you exploring what else could surprise next, now is a perfect moment to broaden your horizons and discover fast growing stocks with high insider ownership

With the stock soaring more than 27% in three months and analyst targets hinting at additional upside, the real question is whether AAON’s turnaround is still underestimated or if future growth is already reflected in today’s price.

Most Popular Narrative: 2.5% Overvalued

AAON’s fair value is set at $103.25, putting it just below the last close price of $105.79. This narrow gap has sharpened debate about whether recent gains reflect all that is achievable, or if something bigger is brewing beneath the surface.

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. (Impacts revenue and earnings)

Read the complete narrative.

Want the full story on this high-stakes valuation? One catalyst, hidden in plain sight, is a game-changing acceleration in future profitability. But the true surprises lie in the bold growth targets and margin leaps that power this fair value. Ready to see what drives such optimism?

Result: Fair Value of $103.25 (OVERVALUED)

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

However, continued ERP rollout disruptions or a sudden slowdown in data center demand could quickly undermine AAON’s recent gains and positive forecasts.

Find out about the key risks to this AAON narrative.

Build Your Own AAON Narrative

If you’re not sold on these conclusions or want to dig even deeper yourself, you can build your own AAON narrative in under three minutes. Do it your way

A great starting point for your AAON research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

Want Even More Winning Investment Ideas?

Stay ahead of the curve and don’t let your next winning stock slip through your fingers. Use the Simply Wall Street Screener for fresh, opportunity-packed picks designed to energize your portfolio.

• Tap into the momentum of tech’s hottest sector as you get the full scoop on AI-powered up-and-comers through these 24 AI penny stocks.
• Unlock potential bargains in the market by handpicking undervalued stocks that could be poised for a comeback thanks to these 871 undervalued stocks based on cash flows.
• Boost your defensive strategy by targeting reliable yields from solid companies with these 16 dividend stocks with yields > 3% offering more than 3% returns.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com