Is StandardAero (SARO) Cheap Following Its SunExpress LEAP 1B Win?

StandardAero (SARO) stock is in focus after the company inducted its first CFM LEAP-1B engine for SunExpress, a Turkish Airlines and Lufthansa joint venture, as a new MRO provider.

See our latest analysis for StandardAero.

StandardAero’s latest LEAP-1B work with SunExpress comes as the stock trades at US$28.73, with a 90-day share price return of 15.57% but a year-to-date share price decline of 3.07%, while the 1-year total shareholder return is 1.95%. This suggests that momentum has strengthened in recent months.

If this kind of aviation services story has your attention, it can be a good moment to widen your watchlist with 18 top founder-led companies

StandardAero’s recent LEAP-1B win with SunExpress and the stronger 90 day share price move put the stock in an interesting spot. Is it worth paying today’s price, or waiting for a different entry point as the valuation stacks up next?

Price-to-Earnings of 32.4x: Is it justified?

On a P/E of 32.4x, StandardAero trades at a level that screens as good value against both sector peers and the wider US Aerospace & Defense industry.

The P/E ratio compares the current share price with earnings per share. For a service heavy business like StandardAero, which generates earnings from recurring engine maintenance and component repair work, this multiple gives a quick read on how the market values each dollar of profit.

StandardAero is described as good value on a P/E basis against the US Aerospace & Defense industry average of 40.3x and a peer group average of 43.1x. However, it also screens as a little expensive versus an estimated fair P/E of 31x, suggesting the current market pricing sits slightly above the level that regression based modelling points to as a potential anchor.

Explore the SWS fair ratio for StandardAero

Result: Price-to-Earnings of 32.4x (UNDERVALUED)

However, StandardAero still faces risks if aviation aftermarket demand softens or if major airline customers reassess outsourcing, which could pressure earnings and challenge the current valuation narrative.

Find out about the key risks to this StandardAero narrative.

Another View on StandardAero’s Value

The earlier P/E discussion suggests StandardAero looks relatively attractive against peers, even if it sits a touch above the fair ratio. A different lens tells a stronger story. Our DCF model points to a future cash flow value of $39.52 per share versus the current $28.73, which screens as undervalued and raises a fresh question: Is the market still applying a discount that long term holders might be willing to accept?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out StandardAero for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 48 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If this StandardAero story has left you weighing both the appeal and the concerns, act quickly and look through the data yourself so you can form a clear view using the 4 key rewards and 1 important warning sign.

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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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