Amentum Holdings (AMTM) shares are in focus after the company was chosen as Industry Mission Partner to support the UK Ministry of Defence's hypersonic strike program under the AUKUS framework. This selection highlights its role in advanced defense engineering.

The latest client win comes after Amentum reaffirmed full year 2026 revenue guidance of US$13.95b to US$14.30b and reported first quarter net income of US$44 million. The share price has a 90 day return of 22.07% and a 1 year total shareholder return of 54.85%. This suggests recent momentum has picked up, despite a 30 day share price return showing a 12.46% decline and the latest close at US$30.97.

If hypersonics and defense tech are on your radar, this is also a good moment to look across the sector and see what stands out in our 34 AI infrastructure stocks.

With the shares up 55% over the past year, yet down 12% in the last month and trading below the current analyst price target, you have to ask: is Amentum undervalued, or is the market already pricing in future growth?

Most Popular Narrative: 7.4% Undervalued

At $30.97, Amentum Holdings sits below the most widely followed fair value estimate of $33.45. That estimate is built around a detailed long term growth and margin story.

Ramp up of large, long duration awards such as the U.S. Space Force Range contract, Sellafield remediation and NASA Cosmos is set to convert the current $47 billion backlog and $20 billion of pending bids into higher run rate revenues and improved operating leverage, supporting sustained earnings growth.

Curious what kind of revenue path, margin lift and future earnings multiple are baked into that fair value line? The narrative leans on modest top line assumptions, sizeable profit expansion and a very different P/E than today. The mix of government contracts, nuclear work and digital projects is doing a lot of heavy lifting in this story.

Result: Fair Value of $33.45 (UNDERVALUED)

However, this depends on government funding staying on track and on Amentum successfully executing complex contracts such as the U.S. Space Force Range and Sellafield without costly setbacks.

Another View: High P/E Puts the Brakes On

That 7.4% gap to the $33.45 fair value story looks appealing, but the current P/E of 77.1x tells a different story. It sits well above the US Professional Services industry at 19.6x and our fair ratio of 36.9x, which points to meaningful valuation risk if sentiment cools.

Our numbers suggest the price is rich compared to both peers and the fair ratio the market could move toward. Anyone interested in Amentum needs to ask: how comfortable are you paying such a premium for a company that only recently turned profitable?

Next Steps

If this mix of excitement and caution around Amentum resonates with you, take a moment to look through the underlying data and pressure test the assumptions yourself. Then check out the 3 key rewards and 2 important warning signs to weigh those concerns and opportunities side by side before you decide what it all means for you.

Looking for more investment ideas?

If Amentum has caught your attention, do not stop here. Use this moment to scan a wider field of stocks and pressure test your next move.

• Target income first and hunt for proven payers with our list of 15 dividend fortresses that could help anchor a portfolio with regular cash flows.
• Go after value by checking out 54 high quality undervalued stocks, where you can focus on companies that our filters flag as potentially trading below their fundamentals.
• Prioritise resilience and stress test your downside with the 87 resilient stocks with low risk scores, highlighting businesses that score well on our internal risk checks.

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.