Where Does the Value Lie in Karman Holdings After Stock Surge and Executive Shake-Up?

• Wondering if Karman Holdings might be a hidden bargain or a potential overvaluation? You are definitely not alone if you are curious about where the value lies right now.
• The stock soared nearly 94% year to date, although it has recently pulled back, down 19.4% over the past week and 22.3% in the last month.
• Recent headlines highlight executive changes and a major acquisition in the pipeline. Both of these factors have contributed to this dramatic share price movement and have drawn attention from optimists hoping for growth as well as investors wary of new risks.
• Currently, Karman Holdings scores 1 out of 6 on our valuation checks, suggesting it only ticks one box for being undervalued. Stick with us as we break down the main methods used to value Karman Holdings, and share a smarter, more holistic approach at the end of this article.

Karman Holdings scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Karman Holdings Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s value by projecting its future free cash flows and discounting them back to reflect their value today. This approach is commonly used to gauge what a business is fundamentally worth, based on how much cash it is expected to generate over time.

For Karman Holdings, DCF analysis uses a two-stage Free Cash Flow to Equity model. The company's most recent reported free cash flow was negative at -$48.67 million, indicating it is currently burning cash. However, forecasts expect a rapid turnaround, rising to $61.26 million in 2026 (sourced from three analysts), and reaching $92.51 million in 2027 (two analyst estimates). Looking further ahead, Simply Wall St extrapolates a ten-year projection, with free cash flows estimated to grow steadily to $236.09 million by 2035.

Taking these future cash flow estimates and discounting them to today's dollars, the DCF model calculates an intrinsic value of $28.09 per share. With the stock trading at a price 107.5% above this estimate, the DCF signals Karman Holdings is currently overvalued based on its cash generation prospects alone.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Karman Holdings may be overvalued by 107.5%. Discover 894 undervalued stocks or create your own screener to find better value opportunities.

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

Approach 2: Karman Holdings Price vs Sales

The Price-to-Sales (P/S) ratio is a frequently used valuation metric for companies like Karman Holdings, especially when profitability is uneven or earnings are affected by unusual items. For businesses that are still establishing stable profits or reinvesting in future growth, the P/S multiple helps investors focus on core revenues and compare them to the company’s share price.

Growth prospects and risk profile play a significant role in determining what is considered a “normal” or “fair” P/S multiple. Fast-growing companies with predictable revenue streams tend to command higher P/S ratios, while companies in riskier situations or with slowing sales usually see discounted multiples.

Karman Holdings currently trades at a notable 18.01x P/S, well above the aerospace and defense industry average of 2.93x and its peer group’s 4.55x. However, rather than relying solely on these benchmarks, Simply Wall St’s Fair Ratio provides a deeper perspective. This proprietary metric considers the company’s actual revenue growth, profit margins, risk factors, industry dynamics, and overall market cap to evaluate what a fair multiple should be for Karman today. Karman’s Fair Ratio is 5.27x, which is noticeably lower than its current multiple.

With the Fair Ratio being meaningfully lower than where shares currently trade, this suggests that Karman Holdings stock remains overvalued based on its sales and fundamentals, even after recent price declines.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1417 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Karman Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is simply your story or perspective on a company, built from your expectations for its future revenue, margins, and profits. Narratives connect a company’s big-picture story to a detailed financial forecast and ultimately to a personalized fair value based on your outlook.

On Simply Wall St’s Community page, millions of investors use Narratives to make investment decisions with more conviction. Narratives make it easy to see at a glance if a stock is under- or overvalued based on your assumptions. Crucially, they automatically update as new news or earnings data comes in, keeping your investment decisions relevant and informed.

Narratives help investors decide when to buy or sell by comparing their calculated Fair Value to the latest share Price. For example, one investor may believe Karman Holdings will outpace its sector and estimate a Fair Value above $50, while another expects limited growth and sees Fair Value closer to $20, reflecting very different stories and outcomes.

Do you think there's more to the story for Karman Holdings? 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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