Recent comments from airline executives about delayed next generation narrowbody jets have pushed Airbus (ENXTPA:AIR) into focus for many investors. The stock is drawing attention as the market reassesses long term aircraft replacement timelines.
See our latest analysis for Airbus.
Against this backdrop of delayed next generation narrowbodies, Airbus has seen firm interest in its existing portfolio, including a fresh Memorandum of Understanding with Philippine Airlines for additional A350-1000s and a new €5,000m share repurchase plan. The stock’s recent 21.41% 90 day share price return contrasts with its 20.33% one year total shareholder return. This suggests that momentum has picked up more recently as investors reassess both growth prospects and capital return plans.
If you are looking beyond Airbus and want to see where capital intensive themes and future capacity needs might intersect with other listed companies, the 34 power grid technology and infrastructure stocks can be a useful place to start.
Bulls see Airbus as a beneficiary of delayed new jets and fresh buybacks. Bears focus on execution risks and what the recent share price move already discounts. Which side do current valuation metrics lean toward?
Most Popular Narrative: 8.4% Undervalued
According to Tokyo's widely followed narrative, Airbus has a fair value of €231 per share, compared with the last close at €212. That gap is what the current bull and bear debate is circling around.
Airbus is not a hyper-growth story. It is a backlog-driven, duopoly industrial platform with improving governance and operational discipline.
But structurally:
Entry barriers are extreme
Switching costs are massive
Demand visibility is high
Curious what sits behind that fair value for Airbus. The narrative leans heavily on steady revenue expansion, rising margins and a future earnings multiple that assumes the duopoly structure holds. The exact mix of growth and profitability assumptions is what really drives the €231 figure.
Result: Fair Value of €231 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, Airbus still faces real tests. Any prolonged supply chain disruption or fresh problems in Defence and Space could quickly challenge this view that the shares are 8.4% undervalued.
Find out about the key risks to this Airbus narrative.
Another View on Airbus Using Market Multiples
While the user narrative points to a fair value of €231 for Airbus, current market multiples indicate a more cautious picture. The stock trades on a P/E of 33.3x, compared with 31.6x for peers and a fair ratio of 35.8x.
This suggests investors are already paying a premium, although not an extreme one. This potentially limits room for error if expectations around earnings or aircraft deliveries change. How comfortable are you paying close to that fair ratio when sentiment around large industrial stocks can swing quickly?
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
If the mixed sentiment on Airbus in this article leaves you undecided, consider reviewing the numbers yourself to form a clear view. To see what investors are optimistic about, start with the 3 key rewards.
Looking for more investment ideas beyond Airbus?
If Airbus still leaves you on the fence, broaden your watchlist. The right mix of opportunities across different profiles can help you stress test any single idea.
- Spot potential value opportunities early by reviewing the 250 high quality undervalued stocks and see which stocks currently line up with your return and risk expectations.
- Prioritise resilience by checking companies in the 306 resilient stocks with low risk scores so you are not caught off guard if sentiment turns quickly.
- Stay ahead of the crowd by scanning the screener containing 515 high quality undiscovered gems before others start paying attention.
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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