How Archer Stock’s Latest Manufacturing Agreements Could Impact Its True Value in 2025

• Ever wondered if Archer Aviation is a hidden gem or just another hyped stock? It is a valid question, and one worth exploring as buzz around air mobility keeps growing.
• After a blistering 226.3% gain over the past three years, Archer’s shares have cooled off lately, dropping 34.1% in the last month and slipping 22.3% since the start of the year.
• Recent headlines about Archer’s new manufacturing agreements, ongoing FAA certification progress, and big-name strategic partnerships have all added fresh context to the stock’s volatility. These developments have kept investors talking, wondering how soon commercial flights could launch and what that might mean for the company’s future potential.
• Based on our six-point checklist, Archer Aviation earns a score of 3 out of 6 for being undervalued, but there is more to valuation than just a single number. Let us break down the main approaches to valuing the stock, before looking at an even smarter way to make sense of it at the end of the article.

Find out why Archer Aviation's -0.5% return over the last year is lagging behind its peers.

Approach 1: Archer Aviation Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's value by forecasting its future cash flows and discounting them back to today. This approach gives an idea of what the business is worth currently and helps investors assess whether a stock is trading below or above its intrinsic value based on those projections.

Looking at Archer Aviation, its current Free Cash Flow stands at negative $481.4 million, which indicates the company is burning cash as it ramps up operations. Analyst projections suggest the company will remain in negative territory through 2027, with Free Cash Flow expected to shift to a positive $232 million by 2029. Further out, extrapolated estimates indicate Archer could generate nearly $1.2 billion in Free Cash Flow by 2035 if its growth develops as forecasted.

After all these cash flows are incorporated into the DCF model and discounted back, the intrinsic value per share is calculated at $22.56. Based on current market prices, the stock is trading at a 67% discount to this estimated fair value. This suggests Archer Aviation may be significantly undervalued according to long-term cash flow potential, though this outcome depends heavily on ambitious growth projections being realized.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Archer Aviation is undervalued by 67.0%. Track this in your watchlist or portfolio, or discover 924 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Archer Aviation.

Approach 2: Archer Aviation Price vs Book

The price-to-book (P/B) ratio is a commonly used valuation tool, especially for companies where current profitability is limited and traditional earnings-based metrics may not be as meaningful. P/B is particularly relevant for newer or growth companies like Archer Aviation, as it compares the company’s market value to its net asset value, helping investors gauge the value of a business relative to its balance sheet strength.

Growth prospects and potential risks are important in interpreting what constitutes a “normal” or “fair” P/B ratio. In general, companies with stronger growth prospects or technology advantages often command higher P/B multiples, while those facing regulatory hurdles, execution risk, or limited market size may trade lower relative to their book value.

Currently, Archer Aviation trades at a P/B ratio of 3.29x. For context, the industry average in Aerospace & Defense is 3.19x, and its peer group sits at 3.80x. Simply Wall St’s Fair Ratio is a proprietary measure tailored for Archer specifically. It weighs factors like its projected earnings growth, the risks around commercialization, asset base, industry trends, and company size to come up with a more meaningful benchmark than a straightforward peer or industry comparison. This holistic approach gives a nuanced view of valuation, recognizing that companies like Archer with unique risks or exceptional growth potential may justifiably command different multiples.

Comparing Archer’s actual P/B to its Fair Ratio shows the valuation is about right, suggesting the stock’s current market price reasonably reflects its book value after accounting for both its promise and its risks.

Result: ABOUT RIGHT

PB ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1440 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Archer Aviation Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is simply your story about a company, your view of its future revenue, profits, margins, and ultimately, what you think its fair value should be. Narratives connect the dots between Archer Aviation’s journey, your financial forecasts, and the share price you believe is justified. They are easy to use and available right on Simply Wall St’s Community page, where millions of investors exchange ideas and update their Narratives in real time as new information comes out.

With Narratives, you can see at a glance whether your Fair Value is above or below the current price, helping you decide when to buy or sell based on your perspective. Each time key news or earnings are announced, your Narrative’s numbers update automatically, so your investment thesis can keep up with reality. For example, some investors might believe Archer will take off quickly and assign a high fair value, while others stay cautious and set a much lower one. This shows just how powerful and personal these story-backed valuation tools can be.

Do you think there's more to the story for Archer Aviation? Head over to our Community to see what others are saying!

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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