A Look at Castellum’s (CTM) Valuation After $66M Federal Contract Win Spurs Investor Interest

Castellum (CTM) has caught the eye of investors after announcing that its subsidiary, Specialty Systems, Inc., landed a $66.2 million contract with the Naval Air Warfare Center Aircraft Division Lakehurst. This five-year agreement marks a key step in Castellum’s move into larger federal contracts.

See our latest analysis for Castellum.

The contract announcement could not have come at a better time for Castellum. While the past year’s share price return is still in the red, a 722% total shareholder return highlights remarkable long-term gains. With momentum shifting, as evidenced by a 20% share price jump in the past week, investors are starting to take notice of this turnaround story and the company's knack for landing major federal contracts.

If this kind of contract-driven momentum has you curious about what else is gaining ground, consider broadening your search and discover fast growing stocks with high insider ownership

With shares surging after this landmark deal and long-term gains standing out, the real question now is whether Castellum’s current price undervalues its future potential or if the market has already priced in further growth.

Price-to-Sales of 2.3x: Is it justified?

Castellum is trading at a price-to-sales ratio of 2.3x, which immediately stands out as more attractive than both its peer group and the broader US IT industry average.

The price-to-sales ratio measures how much investors are willing to pay for each dollar of a company’s sales. This metric is particularly useful for evaluating companies like Castellum, which are not currently profitable, as it focuses on revenue rather than earnings.

At 2.3x, Castellum’s price-to-sales ratio suggests the market is valuing the company below the peer average of 11.8x and slightly under the IT industry average of 2.6x. Compared to its estimated fair price-to-sales ratio of 2.4x, Castellum is priced in line with what regression models predict as justified for its fundamentals. This positions the stock as offering relatively good value, especially for investors who are looking for reasonable entry points based on sales multiples commonly used for unprofitable high-growth companies.

Explore the SWS fair ratio for Castellum

Result: Preferred multiple of 2.3x (ABOUT RIGHT)

However, Castellum’s unprofitability and slowed year-to-date returns remain notable risks that could dampen investor optimism if momentum does not continue.

Find out about the key risks to this Castellum narrative.

Build Your Own Castellum Narrative

If you see the Castellum story differently or want to dig into the details on your own terms, the tools are here to help you build your case in just a few minutes. Do it your way

A great starting point for your Castellum research is our analysis highlighting 1 key reward and 3 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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