Reassessing Aurora Innovation (AUR) Valuation After Strong Three-Year Gains and Recent Share Price Pullback

Recent performance and why the stock is on investors' radar

Aurora Innovation (AUR) has been drifting lower this year, but its long term return since listing remains striking. This has kept the stock in focus as investors reassess self driving bets and the timing around commercialization.

See our latest analysis for Aurora Innovation.

The latest slide in Aurora’s share price, including a 1 day share price return of minus 4.77 percent, comes after a volatile stretch where optimism around long term automation gains still contrasts with a 3 year total shareholder return of 251.20 percent.

If Aurora has you thinking about where the next wave of innovation might come from, this could be the moment to explore high growth tech and AI stocks for other ambitious names on your radar.

Between a sharp pullback, lofty three year gains and a hefty gap to analyst targets, Aurora’s valuation is anything but straightforward. Is this an overlooked entry point, or proof that the market already sees what comes next?

Price-to-Book of 3.7x: Is it justified?

Aurora Innovation last closed at 4.39 dollars, and on a price to book basis the stock screens as slightly expensive versus the broader US software space.

The price to book ratio compares the company’s market value to its net assets, a useful lens for early stage, loss making businesses where earnings offer little guidance. For Aurora, investors are clearly paying a premium to the underlying book value, reflecting expectations that its self driving platform will convert heavy current investment into future economic value.

Relative to the US software industry average of 3.5 times book, Aurora’s 3.7 times multiple is only modestly higher. However, that small premium comes despite the company being unprofitable and forecast to remain so over the next three years. At the same time, the SWS DCF model suggests the shares trade roughly 29.7 percent below an estimated fair value of 6.24 dollars. This is a sharp contrast that signals the market may not be fully pricing in the very strong revenue growth forecasts.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-book of 3.7x (OVERVALUED)

However, substantial ongoing losses and uncertain commercialization timelines could quickly undermine optimism if funding tightens or if autonomous trucking adoption proves slower than forecast.

Find out about the key risks to this Aurora Innovation narrative.

Another angle on value

Looking at Aurora through our DCF model tells a different story to the price to book view. On this lens, the shares appear around 29.7 percent undervalued versus an estimated fair value of 6.24 dollars. This raises the question of whether sentiment is lagging behind the growth outlook.

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 Aurora Innovation 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 903 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 Aurora Innovation Narrative

If you see the numbers differently or want to dig into the assumptions yourself, you can build a personalized view in minutes with Do it your way.

A great starting point for your Aurora Innovation research is our analysis highlighting 2 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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