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Austal (ASX:ASB) Valuation Check After Hanwha Stake Approval, Broker Downgrade and Major Shareholder Exit

Simply Wall St · 2d ago

Austal (ASX:ASB) has suddenly landed back in the spotlight after Canberra cleared Hanwha to almost double its stake, but only under tight security and data access conditions, and the market is clearly uneasy.

See our latest analysis for Austal.

The pullback to A$5.94, including an 11.5% 1 day share price drop, comes after a stellar 91.6% year to date share price return and a 96.0% 1 year total shareholder return. This suggests momentum is cooling as investors reassess risk after Hanwha, the broker downgrade, and State Street’s exit.

If Hanwha’s move has you rethinking defense exposure, this could be a good moment to scan other aerospace and defense names with aerospace and defense stocks for fresh ideas.

With Austal still trading at a hefty discount to analyst targets but coming off a huge multi year run, are investors staring at a mispriced compounder, or is the market already baking in most of the future upside?

Most Popular Narrative Narrative: 22.8% Undervalued

Against Austal’s last close at A$5.94, the most followed narrative pegs fair value much higher, highlighting a sharp disconnect between price and projections.

The group's robust operational cash flows, strengthened balance sheet, and prudent reinvestment into technology (e.g., Additive Manufacturing Center of Excellence in the U.S., MMF3 submarine module facility) not only support future contract execution but also facilitate continued expansion and technological edge, further improving future margin and earnings growth prospects.

Read the complete narrative.

Want to see how steady revenue growth, only modest margin shifts, and a surprisingly punchy earnings multiple can still justify a much higher fair value? Dive in.

Result: Fair Value of $7.69 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this hinges on smooth defense program transitions and stable government funding, with cancellations or delays likely to undermine those upbeat margin and earnings assumptions.

Find out about the key risks to this Austal narrative.

Build Your Own Austal Narrative

If you are not fully convinced by this storyline or want to dig into the numbers yourself, you can build a custom take in just minutes: Do it your way.

A great starting point for your Austal research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

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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.