A Look at AIRO Group Holdings (AIRO) Valuation as Strategic Drone Partnerships Signal Transformation

AIRO Group Holdings (AIRO) is drawing attention after it announced new joint ventures, including a partnership with Nord-Drone, to ramp up defense drone production for U.S., NATO, and Ukraine forces. These collaborations represent an important step in their expansion strategy.

See our latest analysis for AIRO Group Holdings.

Despite a flurry of joint ventures and an upsized capital raise signaling AIRO’s determination to scale, the market has responded with caution. A 1-month share price return of -42.3% and a steep -58% for the past quarter indicate that investors remain wary of near-term hurdles and shipment timing risks. Still, these strategic steps are setting the stage for possible momentum shifts if operational execution delivers on longer-term ambitions.

Interested in other companies teaming up to reshape the defense industry? Now’s a great time to explore See the full list for free.

With the stock trading well below analyst targets and new ventures positioning AIRO for future growth, the key question is whether investors are looking at an undervalued opportunity or if upcoming gains are already included in the price.

Price-to-Sales of 3.8x: Is it justified?

AIRO Group Holdings is currently trading at a price-to-sales (P/S) ratio of 3.8x, which is above both the US Aerospace & Defense industry average of 2.9x and the peer average of 3.4x. Despite trading at a significant discount to fair value based on other models, the current valuation via the P/S ratio signals a relatively expensive position compared to similar companies, especially given the latest share price of $10.10.

The price-to-sales ratio is commonly used to evaluate companies like AIRO that are not yet profitable, as it measures how much investors are paying for each dollar of revenue. Because AIRO remains unprofitable and is in a period of rapid growth and investment, the P/S ratio becomes a key metric for benchmarking against industry norms.

The implication is that the market is pricing AIRO at a premium above its peers, likely reflecting enthusiasm for its growth prospects, recent revenue momentum, and its new defense industry partnerships. However, this higher multiple leaves less margin for error if forecasts do not materialize as hoped and deviates from the average the market usually assigns to companies at a similar stage.

Compared to industry and peer averages, AIRO’s 3.8x price-to-sales ratio stands out as notably higher. This suggests that investors are factoring in aggressive future growth, even as the company is not currently profitable. Without a fair ratio available, it is hard to determine if this premium is warranted or if there is room for normalization in the future.

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

Result: Price-to-Sales of 3.8x (OVERVALUED)

However, ongoing profitability challenges and unpredictable revenue growth could quickly dampen AIRO’s upside if progress falters or if market sentiment sours further.

Find out about the key risks to this AIRO Group Holdings narrative.

Another View: Discounted Cash Flow Points to Undervaluation

While the price-to-sales metric suggests AIRO's shares are trading at a premium, our SWS DCF model shows a very different picture. According to the DCF approach, the stock is actually trading about 85.8% below its estimated fair value. That is a significant gap, raising the question of whether the market is overlooking AIRO’s long-term potential or simply factoring in a substantial amount of risk. Which scenario will play out?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out AIRO Group Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 886 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own AIRO Group Holdings Narrative

If you want to see the numbers differently or prefer your own perspective, you can craft a personalized take on AIRO Group Holdings in just a few minutes. Do it your way.

A great starting point for your AIRO Group Holdings research is our analysis highlighting 4 key rewards 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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