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After a strong five year run that has seen Airbus return 92.4%, the stock changes hands at about €202.70. Both the Discounted Cash Flow (DCF) intrinsic value estimate and the earnings based multiples still point to an undervalued picture.
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Over five years, Airbus has returned 92.4%, which puts recent short term share price weakness into a longer context of substantial gains.
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Airbus may see its valuation supported by ongoing demand for aircraft such as the A321XLR and plans to increase A350 production. Safety investigations around the recent A320neo hydraulic incident remain a key risk that could affect sentiment and future costs.
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Across the broader checks, Airbus screens as undervalued in 5 of 6 metrics, and that high score suggests the current share price is below what many fundamentals would justify.
The stock’s next move may depend on whether the market closes the roughly 25.5% gap implied by the current discount to the intrinsic value estimate, or treats recent news as a reason to keep pricing Airbus cautiously.
Does Airbus Look Undervalued on Cash Flow?
The Discounted Cash Flow (DCF) model estimates what Airbus could be worth based on the cash it is expected to generate for shareholders over time. Airbus currently produces last twelve month free cash flow of about €4.8b. The model treats this as growing from this base and then settling into a more moderate long term pace.
Under these assumptions, the DCF model points to an intrinsic value of about €272 per share, compared with the current price near €203. That implies the stock trades at roughly a 25.5% discount to this cash flow based estimate, so the market is valuing Airbus below what this model suggests its cash generation supports. The ongoing investigation into the recent A320neo triple hydraulic failure helps explain why some investors may still be cautious even with this discount in place.
On balance, the DCF workup indicates Airbus stock currently appears undervalued relative to its estimated intrinsic value.
Our Discounted Cash Flow (DCF) analysis suggests Airbus is undervalued by 25.5%. Track this in your watchlist or portfolio, or discover 270 more high quality undervalued stocks.
