Blog

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Archer Aviation.

Our Discounted Cash Flow (DCF) analysis suggests Archer Aviation is undervalued by 62.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

The price-to-book (PB) ratio is a common valuation tool, especially useful for companies that are not yet profitable. For innovative players like Archer Aviation, early gains are typically reinvested for future growth, making traditional measures like price-to-earnings less informative. Instead, PB offers a direct way to see how the market values the company’s assets relative to its book value today.

Growth potential and business risks both affect what counts as a “fair” PB ratio. When investors expect rapid growth or industry-changing breakthroughs, they may accept a higher PB. On the other hand, higher risks or inconsistent financial results usually justify a lower multiple.

Currently, Archer Aviation trades at a PB ratio of 4.33x. This puts it just below the peer average of 4.45x and above the Aerospace & Defense industry average of 3.71x. While these comparisons are helpful, they do not capture the nuances unique to Archer’s profile.

This is where Simply Wall St’s “Fair Ratio” comes in. The Fair Ratio is designed to reflect the PB multiple that best fits Archer’s specific growth outlook, profit margins, risks, and overall market cap. Unlike standard benchmarks, it looks beyond broad industry averages and peer groups, providing a more tailored picture of valuation.

When comparing Archer’s actual PB ratio to the Fair Ratio, the difference is minimal, suggesting the market price is a solid match for its fundamentals right now.

Result: ABOUT RIGHT

PB ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is your own story or perspective on a company, grounded in your assumptions about its future revenue, earnings, margins, and what you believe is a fair value. Narratives make the numbers come alive by tying your outlook for Archer Aviation directly to a financial forecast and then calculating a fair value based on your beliefs.

On Simply Wall St’s platform, Narratives are easy to create and available for millions of investors to use within the Community page. Narratives help you decide when to buy or sell by comparing your Fair Value to the current Price. They update automatically whenever new information like earnings or major news is released.

This means investors can quickly respond to fresh developments, refine their forecasts, and see how their story stacks up against others. For example, one investor’s Narrative may see Archer’s fair value as high as $36 per share, while another might estimate it at just $11 based on a more cautious outlook.

Do you think there’s more to the story for Archer Aviation? Create your own Narrative to let the Community know!

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 ACHR.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com