• If you are wondering whether Avantor's current share price reflects its underlying value, the recent returns data give you plenty to think about before making any decisions.
• The stock last closed at US$7.88 and has inched up 0.1% over the past week, but is down 7.3% over 30 days, 31.2% year to date, 37.2% over 1 year and 61.4% over 3 years, with a 75.1% decline over 5 years.
• These longer term declines often prompt investors to look for explanations in company specific developments, sector sentiment shifts or changes in risk appetite across the market. This article does not focus on any single news event; instead, it aims to frame those past moves in the context of what the stock looks like on various valuation measures today.
• Avantor currently has a valuation score of 5 out of 6, and the sections that follow will walk through how different valuation approaches arrive at that picture, before finishing with a broader way to think about what valuation really means for this stock.

Approach 1: Avantor Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a stock could be worth by projecting future cash flows and discounting them back to today using a required rate of return.

For Avantor, the model uses a 2 Stage Free Cash Flow to Equity approach, starting from last twelve months free cash flow of about $433.2 million. Analysts provide explicit cash flow estimates for several years, and Simply Wall St then extends those projections further out. Within the 10 year path, one reference point is projected free cash flow of $679.0 million in 2030, with each future cash flow discounted back to a present value, such as $471.4 million in 2026 and $438.1 million in 2030.

Aggregating these discounted cash flows, plus a terminal value, gives an estimated intrinsic value of about $14.51 per share. Against the recent share price of $7.88, the DCF output points to an implied discount of roughly 45.7%, which indicates that, on this model, the stock screens as materially undervalued.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Avantor is undervalued by 45.7%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Approach 2: Avantor Price vs Sales

For companies where profitability is limited or earnings are volatile, the P/S ratio can sometimes give a clearer sense of how the market is valuing each dollar of revenue. What investors are really weighing here is how much they are willing to pay for current sales given their expectations for future growth and the risks they see in the business.

Avantor currently trades on a P/S ratio of 0.82x. That is well below the Life Sciences industry average P/S of 3.51x and also below the broader peer group average of 4.14x. To add more context, Simply Wall St calculates a proprietary “Fair Ratio” for Avantor of 2.54x. This is the P/S level suggested by factors such as its earnings profile, industry, profit margins, market cap and identified risks.

This Fair Ratio can be more useful than a simple comparison with peers or the industry, because it is tailored to the company’s own characteristics rather than relying on broad group averages. Comparing the current 0.82x P/S with the 2.54x Fair Ratio indicates that the stock trades at a discount on this measure.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Avantor Narrative

Earlier the article mentioned that there is an even better way to understand valuation, so this is where Narratives come in, letting you attach a clear story about Avantor to the numbers you are using for fair value, revenue, earnings and margins.

A Narrative is simply your viewpoint on how Avantor’s business plays out, linked directly to a financial forecast and then to a fair value estimate, so you are not just looking at ratios in isolation.

On Simply Wall St’s Community page, used by millions of investors, Narratives are an easy tool that lets you compare your own fair value with the current share price and use that gap to help decide whether Avantor looks attractive or stretched for your goals, without needing to build a spreadsheet.

These Narratives update automatically when new earnings, news or guidance arrive, so your fair value view keeps adjusting as fresh information is reflected in the assumptions.

For Avantor, one investor might lean toward a more optimistic Narrative that lines up with a higher fair value such as US$16.47, while another might prefer a cautious Narrative closer to US$8.00, and comparing those to the current price can help you decide which story you find more reasonable.

Do you think there's more to the story for Avantor? Head over to our Community to see what others are saying!

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.