Austal (ASX:ASB) Valuation Review As All Time High Follows Major Defence Contract Wins

Simply Wall St.01-14

Austal (ASX:ASB) has hit an all time high after securing a Strategic Shipbuilding Agreement with the Australian Government worth an initial A$1b to A$1.3b and expanding its U.S. shipyard operations. ...

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See our latest analysis for Austal. That agreement and the U.S. yard expansion sit on top of strong recent momentum, with a 30 day share price return of 33.74% and a 1 year total shareholder return of 178.10% signaling that investors are aggressively repricing Austal’s defence exposure. If Austal’s move has you rethinking defence exposure, it could be a useful time to scan other aerospace and defense stocks that are catching market interest. With Austal now trading around A$8.76 and an intrinsic value estimate suggesting roughly a 57% discount, yet sitting above the average analyst target, you have to ask: is there still a buying opportunity here, or is the market already pricing in future growth? AdvertisementMost Popular Narrative: 13.9% Overvalued With Austal closing at around A$8.76 against a narrative fair value of A$7.69, the current price sits above what this framework suggests.  The analysts have a consensus price target of A$7.298 for Austal based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$8.0, and the most bearish reporting a price target of just A$5.58.  Read the complete narrative. Curious how double digit revenue and earnings growth assumptions still lead to only a modest upside case? The key lies in margin expectations, dilution and the chosen earnings multiple. Want to see how those moving parts interact under a 7% discount rate and a future P/E that is well below many peers? Result: Fair Value of $7.69 (OVERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this narrative can still be knocked off course if key government contracts shift, or if new programs bring tighter margins and cost pressure. Find out about the key risks to this Austal narrative. Another View: P/E Ratios Sending a Different Signal While the narrative fair value suggests Austal is 13.9% overvalued at around A$8.76, the P/E story is less one sided. Austal trades on a 41x P/E, which is below the global Aerospace & Defense average of 51.8x, but slightly above its peer average of 40.7x and above its own fair ratio of 30.5x. That mix points to a company priced richer than its immediate peers, cheaper than the wider industry, and above where our fair ratio suggests the market could move to over time. Is that premium something you are comfortable paying for Austal’s contract pipeline and growth forecasts, or a valuation risk you are not willing to take? See what the numbers say about this price — find out in our valuation breakdown. ASX:ASB P/E Ratio as at Jan 2026 Build Your Own Austal Narrative If you see the numbers differently or prefer to stress test your own assumptions, you can build a custom view of Austal in minutes: Do it your way. A great starting point for your Austal research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision. Ready to hunt for more ideas? If Austal has sharpened your interest in defence and beyond, do not stop here, the next move that fits your portfolio could already be on your radar.  Spot potential value setups by scanning these 886 undervalued stocks based on cash flows that the market may be pricing more cautiously than their cash flows suggest. Zero in on future focused themes with these 25 AI penny stocks that are tying artificial intelligence to real business models and fundamentals. Add income focused names to your watchlist through these 13 dividend stocks with yields > 3% offering yields above 3%.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    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\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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