Archer Aviation’s Valuation: Assessing the Impact of Major Expansion Moves and New Capital

Archer Aviation has been busy. Recent events are drawing plenty of attention. The company is acquiring Hawthorne Airport in Los Angeles, raising $650 million in fresh capital, and expanding its patent portfolio.

See our latest analysis for Archer Aviation.

Despite a series of big moves, from securing control of a key Los Angeles airport to expanding its global patent footprint and winning a coveted role in Japan’s eVTOL ecosystem, Archer Aviation has seen its share price tumble, with a 1-month share price return of -34% and a 7-day drop of -27%. Yet momentum over the longer haul is striking, as shareholders who stuck through the volatility have enjoyed a 110% total shareholder return over the past year and nearly 200% over three years, showing both the risks and rewards that come with backing early-stage aviation pioneers.

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With the stock now trading at a significant discount to analyst targets and recent milestones boosting its long-term outlook, investors may wonder whether Archer Aviation is undervalued at current levels or if the market has already priced in its future growth trajectory.

Price-to-Book Ratio of 3.1x: Is it justified?

Archer Aviation is trading at a price-to-book ratio of 3.1x, which is below both the US Aerospace & Defense industry average of 3.5x and its peer average of 4.1x. This suggests shares may be undervalued on this basis.

The price-to-book (P/B) ratio compares a company's market value to its book value and gives investors insight into whether a stock is priced attractively relative to its net assets. This metric is especially useful for early-stage or asset-heavy industries like aerospace, where earnings can be volatile or negative as companies ramp up operations.

With Archer Aviation still pre-revenue and unprofitable, the market appears cautious. However, its lower than average P/B ratio could indicate a disconnect between recent negative sentiment and its longer-term prospects. The numbers show that, even after recent dilution and ongoing losses, the stock is being valued more conservatively than industry peers.

Compared to both its sector and closest rivals, Archer's valuation stands out as relatively compelling for those betting on the company's turnaround and the high-growth potential in eVTOL technologies.

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

Result: Price-to-Book of 3.1x (UNDERVALUED)

However, ongoing net losses and zero current revenue remain major hurdles that could challenge Archer Aviation's bullish outlook in the near term.

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

Another View: SWS DCF Model Suggests Deeper Undervaluation

While the price-to-book ratio points to Archer Aviation as undervalued compared to the industry and its peers, our SWS DCF model presents an even stronger case. It estimates the stock’s fair value at $32.30, which is significantly above the current share price of $8.18. Is the market overlooking a major opportunity here, or is it accounting for risks that the model does not consider?

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 870 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

If you want to dig deeper or challenge these conclusions, the tools and data are at your fingertips to craft a fresh narrative in under three minutes. So why not 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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