Amentum Holdings (AMTM): Evaluating Valuation After Strong Earnings Surprise and Major Contract Wins

Amentum Holdings delivered a strong earnings report for fiscal 2025, swinging to net income and beating expectations on both sales and profit. The company also secured key contracts in the space and nuclear sectors. In addition, it provided 2026 revenue guidance that closely matches market consensus.

See our latest analysis for Amentum Holdings.

Amentum Holdings has seen remarkable momentum this year, with a 1-month share price return of 36.6% and a year-to-date gain of 35.4%. This reflects renewed investor confidence after its strong earnings, contract wins, and steady 2026 outlook. The 1-year total shareholder return of 20.5% highlights that both recent and long-term performance are attracting attention as the company builds on its strategic expansion in digital and government engineering solutions.

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But with shares soaring to new highs, the question becomes clear: is Amentum Holdings still trading at an attractive valuation, or has the market already priced in all of its future growth potential?

Price-to-Earnings of 108.3x: Is it justified?

At a last close price of $29.33, Amentum Holdings carries a price-to-earnings ratio of 108.3x, a multiple that positions it as significantly more expensive than its peer group in the professional services sector.

The price-to-earnings (P/E) ratio measures how much investors are paying for each dollar of a company's earnings. In Amentum’s case, such a high P/E suggests the market is placing aggressive value on its earnings potential, likely reflecting expectations for rapid profit growth and transformative contracts in digital and engineering solutions.

However, this optimism stands in sharp contrast with peer averages. Amentum’s P/E of 108.3x is much higher than both the peer group average at 20.2x and the US professional services industry average of 24.3x. Relative to the estimated fair P/E ratio of 45.6x, Amentum still appears richly valued. If market expectations do not materialize, this gap could narrow considerably.

Explore the SWS fair ratio for Amentum Holdings

Result: Price-to-Earnings of 108.3x (OVERVALUED)

However, slower revenue growth or a failure to secure major new contracts could quickly challenge the optimism reflected in Amentum Holdings’ current valuation.

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

Another View: Discounted Cash Flow Tells a Different Story

While Amentum Holdings looks expensive based on its price-to-earnings ratio, our SWS DCF model paints a contrasting picture. The shares are actually trading about 53% below our estimated fair value of $62.77. Could the market be overlooking the company’s long-term cash flow potential?

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 933 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 see things differently or want to delve deeper into Amentum Holdings’ numbers, you can quickly craft your own narrative in just a few minutes. 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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