Amentum (AMTM): Valuation Update Following Major Defense Partnership and $4B Space Force Contract Win

If you have been keeping tabs on Amentum Holdings (NYSE:AMTM) lately, you’ll know their week was anything but quiet. The company announced a new partnership milestone with the Naval Surface Warfare Center, breaking ground on a specialized test facility to advance defense microelectronics. The business also landed a $4 billion Space Force contract. Both moves highlight Amentum’s deep roots in national security and engineering and directly connect the business to high-value, long-term military technologies, something investors have every reason to notice.

This flurry of activity appears to have caught the market’s attention. Amentum’s shares have climbed 17% in the past three months, after weathering a slight dip over the past month. Momentum has been building through 2025, supported by steady revenue growth and a significant uptick in net income. Fresh government wins and increased investment in critical infrastructure are quickly shaping investor sentiment, and recent news is further contributing to that narrative.

With the stock’s latest rise, the real question is whether there is further upside: does today’s price still understate the value of Amentum’s expanding government footprint, or has the market already factored in the growth story?

Price-to-Earnings of 116.7x: Is it justified?

Based on the price-to-earnings (P/E) ratio, Amentum Holdings appears expensive relative to both its industry and peer group averages. The company's current P/E stands at 116.7x, which is substantially higher than the US Professional Services industry average of 26.5x and the peer average of 22x.

The P/E ratio measures how much investors are willing to pay for each dollar of earnings. A high P/E may suggest that the market has high expectations for a company's future profitability or is overvaluing it based on current fundamentals. For a government contractor like Amentum Holdings, this is particularly relevant since stable and predictable earnings are generally valued by investors in this sector.

Despite strong growth prospects, the elevated P/E ratio raises questions about whether the current market price already reflects much of the expected upside, or if investors are being overly optimistic about future growth rates relative to peers.

Result: Fair Value of $61.28 (UNDERVALUED)

See our latest analysis for Amentum Holdings.

However, slower revenue growth or disappointing contract renewals could temper expectations. Even high-profile wins may not guarantee consistent long-term performance.

Find out about the key risks to this Amentum Holdings narrative.

Another View: Discounted Cash Flow

While price-to-earnings suggests that Amentum shares look expensive, our DCF model takes a different approach. Using future cash flows, it indicates that Amentum may be undervalued by the market. Which perspective offers the clearest picture?

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 Amentum Holdings 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 Amentum Holdings Narrative

If you have a different perspective on the numbers or want to draw your own conclusions, you can build a custom narrative in just a few minutes. So, why not do it your way?

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