StandardAero (NYSE:SARO) Valuation Insights Following New MRO Wins with SalamAir and Mauritania Airlines

StandardAero (NYSE:SARO) has secured new MRO agreements with SalamAir and Mauritania Airlines for support of CFM International LEAP and CFM56 engines. These recent deals highlight steady demand for aviation engine services globally.

See our latest analysis for StandardAero.

While these headline wins with SalamAir and Mauritania Airlines bolster StandardAero’s presence in global aviation, the company’s share price has also been showing signs of renewed momentum, up 15.7% so far in 2025. However, it is worth noting that the one-year total shareholder return is still down nearly 9%, hinting that the recent gains only partly offset earlier declines as investors weigh new growth prospects against prior headwinds.

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With new airline partnerships and expansion in engine services, is StandardAero now trading at a discount to its true potential? Alternatively, has recent optimism pushed the share price to fully reflect future growth?

Price-to-Earnings of 71.4x: Is it justified?

StandardAero trades with a price-to-earnings ratio of 71.4 times earnings, well above both industry peers and the broader Aerospace & Defense sector. Despite recent business wins, the current market price signals investors have high expectations for future profit growth.

The price-to-earnings (P/E) ratio measures how much investors are willing to pay for each dollar of the company’s net income. In a sector like Aerospace & Defense, where steady profit generation and innovation are prized, a higher P/E can sometimes be justified if growth is robust and sustainable. In this case, StandardAero’s high ratio suggests the market expects substantial earnings expansion in the future, possibly pricing in new MRO contracts and improving profitability.

However, the stock's current P/E of 71.4x greatly exceeds the industry average of 38.7x and the peer average of 66.3x. This signals that StandardAero is priced at a substantial premium. Even compared to the "fair" P/E, which regression analysis sets at 36.1x, the current valuation far outpaces justifiable levels for the sector. This gap highlights a disconnect between recent earnings and where the broader market may consider a reasonable price.

Explore the SWS fair ratio for StandardAero

Result: Price-to-Earnings of 71.4x (OVERVALUED)

However, slower revenue growth or a pullback in airline contracts could quickly challenge the current optimism around StandardAero’s elevated valuation.

Find out about the key risks to this StandardAero narrative.

Another View: What Does Our DCF Model Suggest?

While StandardAero appears expensive based on its earnings ratio, our SWS DCF model offers a different perspective. It suggests the stock is trading about 3.2% below its fair value, which indicates modest undervaluation. Could analysts’ future cash flow expectations be more realistic than current market sentiment?

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 StandardAero 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 StandardAero Narrative

If you'd like to challenge this assessment or take a different approach, you can independently analyze the figures and craft your own view in just a few minutes with Do it your way.

A great starting point for your StandardAero research is our analysis highlighting 4 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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