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StandardAero (SARO) stock is in focus after the company announced a long term agreement with Rolls Royce to provide repair and overhaul support for MT7 marine gas turbine engines used in the U.S. Navy’s Ship to Shore Connector program.
See our latest analysis for StandardAero.
Despite the long term Rolls Royce agreement and recent fund interest, StandardAero’s 1 year total shareholder return decline of 7.33% and 90 day share price return decline of 25% suggest momentum has been fading from earlier levels.
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With revenue at US$6.06b, net income of US$277.42m, and shares trading at US$24.54 alongside an indicated intrinsic discount of 42%, the key question is whether SARO is genuinely undervalued or if the market is already accounting for future growth.
StandardAero’s most followed narrative points to a fair value of $35.50 compared with the last close at $24.54, putting the focus firmly on what could drive that gap.
Accelerating LEAP engine inductions, a growing backlog and expanding OEM authorized repair content position StandardAero to scale toward roughly $1 billion of LEAP revenue in the next few years. This is expected to support sustained double digit top line growth and higher earnings as the program turns margin positive in 2026.
Curious what sits behind that revenue ramp, margin shift and the discount rate used to pull those dollars back to today? The fair value hinges on a specific blend of revenue growth, margin expansion and earnings expectations that are more aggressive than simple straight line forecasts. If you want to see exactly how those moving parts stack up, the full narrative lays out the step by step earnings path that underpins the $35.50 figure.
Result: Fair Value of $35.50 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, this hinges on LEAP programs turning profitable on schedule and contract changes playing out as expected, while supply chain setbacks or softer demand could quickly challenge that story.
Find out about the key risks to this StandardAero narrative.
With both risks and rewards in play, do you feel the narrative fits your own view or falls short? Take a closer look at the full balance of 4 key rewards and 1 important warning sign
If SARO has caught your eye, do not stop here. Use focused stock lists to spot other opportunities that could round out your portfolio and sharpen your edge.
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.
Companies discussed in this article include SARO.
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