Assessing Amentum Holdings After 15% Weekly Surge and Recent Market Momentum in 2025

Thinking about what to do with your Amentum Holdings shares? You are not alone. This stock has been catching attention, especially after a notable 15.0% jump just in the past week, building on a 7.1% gain over the last month. Year to date, the stock is up by 19.8%, a big turnaround that will have some investors wondering if it is a strong growth story in the making or if rising optimism has started to outweigh the underlying fundamentals. On a longer view, though, the stock is still slightly negative over the last year, down 2.0%, so questions remain about how sustainable this momentum is.

Some of these price moves seem to reflect a shift in market sentiment, with growing acceptance of how Amentum Holdings fits into evolving industry trends. Investors have been reassessing the company’s position as broader sector developments spark renewed interest in its business. But is now the right time to buy, hold, or even trim your position?

To help answer that, let’s take a closer look at how Amentum Holdings stacks up across key valuation checks. Out of six common measures of undervaluation, it clears just two, giving it a valuation score of 2. That is a starting point, but as any seasoned investor knows, numbers alone do not tell the whole story. In the next section, we will break down each valuation method to see where the company shines, where it lags, and if you stick with me, a smarter way to judge what Amentum shares are really worth.

Amentum Holdings scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

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

The Discounted Cash Flow (DCF) model estimates the true value of a company by projecting how much cash it will generate in the future and then discounting those amounts back to today's dollars. This gives investors a way to judge whether the current share price reflects the business’s long-term earning power.

For Amentum Holdings, the DCF analysis is built on its most recent free cash flow figure of $139.5 million. Analyst estimates see this figure rising quickly, with free cash flow projected to reach $658.1 million by 2027. In addition, projections extrapolated by Simply Wall St suggest steady annual growth, with free cash flow expected to exceed $910 million by 2035. These projections form the backbone of the model, reflecting both analyst estimates for the next five years and longer-term growth assumptions for the following period.

The result of these calculations is a DCF intrinsic value of $53.55 per share. Currently, the share price trades at a 51.5% discount to this fair value estimate, which suggests the stock appears significantly undervalued based on discounted cash flow projections.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Amentum Holdings is undervalued by 51.5%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Amentum Holdings Price vs Earnings

For established, profitable companies, the Price-to-Earnings (PE) ratio is one of the most widely used valuation methods. It helps investors judge what they are paying today for each dollar of a company’s earnings. A lower PE could hint at an undervalued stock, while a higher one may reflect high growth expectations or greater perceived risk.

Growth prospects and business risks both have a big impact on what is considered a “normal” or fair PE ratio for any stock. Faster-growing and lower-risk companies often fetch higher PEs, while those facing uncertainty or slow growth typically see lower PEs.

Amentum Holdings currently trades at a PE of 121.4x, well above both the industry average of 26.8x and the average for its closest peers at 25.2x. At first glance, this makes the stock look expensive compared to other companies in the Professional Services space. However, these simple comparisons do not factor in company-specific features like its earnings outlook or unique risks.

This is where the Simply Wall St "Fair Ratio" comes in, as it provides a more comprehensive benchmark tailored to Amentum Holdings by factoring in earnings growth, profit margins, industry trends, market cap, and risk profile. The Fair Ratio for Amentum is 44.8x, considerably lower than the current PE. This suggests investors are paying a premium above what a balanced assessment of risks and growth would justify.

Comparing Amentum’s current PE to the Fair Ratio indicates the stock is overvalued on this metric.

Result: OVERVALUED

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

Upgrade Your Decision Making: Choose your Amentum Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your own story about a company, built around your views of its future revenue, earnings, margins and what you think is a fair value, connecting the business’s real story to the financial numbers behind it.

This approach ties your perspective about where Amentum Holdings is heading into a concrete financial forecast, and from there, directly to a fair value. Narratives make it easy for anyone to frame and update their investment thesis, using an accessible tool available right now on Simply Wall St’s Community page, used by millions of investors worldwide.

Narratives help you decide if it is time to buy or sell by comparing your Fair Value to today’s share Price. Even better, your Narrative is kept up to date automatically when new reports or breaking news come in, so your analysis always reflects the latest information. For Amentum Holdings, one investor may see its potential as high as $75 per share, while another believes it is fairly valued at $45, illustrating how Narratives capture different perspectives in real time.

Do you think there's more to the story for Amentum Holdings? Create your own Narrative to let the Community know!

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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