Archer Aviation (ACHR): Assessing Valuation After 14% One-Month Share Price Gain

Archer Aviation (ACHR) stock has been in focus recently as investors weigh its month returns, which climbed 14%. The company’s performance is drawing interest, especially as electric air mobility continues gaining attention in the transport sector.

See our latest analysis for Archer Aviation.

Momentum seems to be building for Archer Aviation, with a 14% 1-month share price return and steady gains this year. The real headline is its 242% total shareholder return over the past 12 months, which points to shifting sentiment around its long-term growth prospects.

If Archer’s surge has you looking at the skies, you can check out the full landscape of innovative aviation stocks with our See the full list for free.

With strong recent gains on the books, the next question is whether Archer’s current valuation leaves room for more upside or if the market is already factoring in all of its future growth. Is there a buying opportunity, or is the stock fully priced in?

Price-to-Book of 4.3x: Is it justified?

Archer Aviation’s price-to-book ratio currently stands at 4.3x, which is notably higher than the US Aerospace & Defense industry average of 3.6x. With shares closing at $11.22, the stock is priced at a premium to most of its sector peers when measured by this metric.

The price-to-book ratio measures how much investors are paying compared to the company's book value. In capital-intensive sectors like aerospace, this can highlight whether the market expects strong asset growth or profitability down the track, even if the company is currently loss-making.

For Archer, trading above the industry average suggests that the market is pricing in significant growth potential or a future turning point. Despite the company not currently generating profits, investors appear willing to pay up for the promise of exceptional revenue growth and disruptive technology, overlooking today's lack of earnings. Compared to the industry, Archer’s premium valuation stands out and could come under scrutiny if growth targets are missed.

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

Result: Price-to-Book of 4.3x (OVERVALUED)

However, revenue remains at zero, and significant net losses continue. This leaves Archer vulnerable if growth or commercialization milestone expectations are disappointed.

Find out about the key risks to this Archer Aviation narrative.

Another View: Discounted Cash Flow Perspective

Looking at Archer Aviation through the lens of our DCF model, the story changes entirely. According to this intrinsic value method, shares are trading at $11.22, which is well below the estimated fair value of $29.65. This suggests deep undervaluation. Does this point to a hidden opportunity, or is the market pricing in significant risks?

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 Archer Aviation 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 832 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 Archer Aviation Narrative

Keep in mind, if you’d rather dive into the numbers yourself or have a different take, you can craft your own view in just a few minutes. Do it your way

A great starting point for your Archer Aviation research is our analysis highlighting 2 key rewards and 3 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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