Firefly Aerospace (FLY): Examining Valuation After Steep Recent Share Price Decline

Firefly Aerospace (FLY) has had a mixed stretch lately, with shares dipping 6% after yesterday’s close. Over the past month, the stock has slipped 34%, even as the company continues to report rapid revenue growth.

See our latest analysis for Firefly Aerospace.

Over the past year, Firefly Aerospace’s share price return has been on a steady downward trend, with momentum clearly fading despite recent revenue gains and industry excitement. A steep year-to-date share price return of -53% suggests the market remains cautious about the company’s growth staying power or persistent risks in execution.

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With the stock trading at a significant discount to analyst targets, yet facing steep recent declines, investors are left to wonder: Is Firefly Aerospace undervalued, or has the market already priced in all its future growth?

Price-to-Sales Ratio of 40.4x: Is it justified?

Trading at a price-to-sales (P/S) ratio of 40.4 times, Firefly Aerospace commands a multiple that stands out well above both its peers and the industry standard, despite its recent share price slide to $28.36.

The price-to-sales ratio compares a company’s market capitalization to its total revenue. It is often used to value early-stage growth firms or unprofitable technology companies, as it reflects the premium investors are willing to pay for every dollar of sales. For Firefly Aerospace, this elevated ratio signals that the market may be placing a hefty bet on its future growth trajectory.

Yet, this premium is substantial when compared to aerospace and defense rivals. The sector’s average sits at only 3.3x, suggesting expectations for Firefly’s revenue growth are much higher or that the market is overestimating its prospects relative to the broader industry. No fair ratio is currently available, leaving little evidence the market could see this multiple as justified going forward.

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

Result: Price-to-Sales of 40.4x (OVERVALUED)

However, persistent net losses and a premium valuation could quickly sour investor sentiment if revenue growth were to slow unexpectedly.

Find out about the key risks to this Firefly Aerospace narrative.

Another View: Discounted Cash Flow Suggests Upside

While Firefly Aerospace looks expensive based on its price-to-sales ratio, the SWS DCF model offers a different angle. According to our DCF analysis, shares are trading at a 22.7% discount to intrinsic value. This suggests the market might be missing some long-term potential. Could the real value be hiding beneath the surface?

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 Firefly Aerospace 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 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 Firefly Aerospace Narrative

If you want to see the numbers and reach your own conclusion, you can build your own data-driven perspective on Firefly Aerospace in just a few minutes, or Do it your way.

A great starting point for your Firefly Aerospace research is our analysis highlighting 3 key rewards and 1 important warning sign 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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