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If you are wondering whether Aptiv offers good value at today’s price or if the recent excitement is already priced in, this breakdown will help you separate story from substance.
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The stock has quietly climbed 7.2% over the last month and is up 28.7% year to date and 31.8% over the last year, even though the 3-year and 5-year returns of -15.0% and -39.6% show longer-term holders are still under water.
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Behind these moves, investors have been watching Aptiv’s role in advanced vehicle electronics and software, as the market increasingly prices in the shift toward connected and autonomous cars. Ongoing partnerships with major automakers and growing demand for EV-ready architectures have kept sentiment constructive, even as the broader auto space remains cyclical.
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On our framework, Aptiv scores a 3/6 valuation check score. This means it screens as undervalued on half of the metrics we track. We will unpack what that actually means as we compare DCF, multiples, and other methods, before finishing with a more holistic way to think about its true worth.
A Discounted Cash Flow model estimates what a company is worth today by projecting future cash flows and discounting them back to their present value using a required return. For Aptiv, the model uses a 2 stage Free Cash Flow to Equity approach built on cash flow projections.
Aptiv generated last twelve month free cash flow of about $1.6 billion, providing a solid base for the forecast. Analysts supply detailed estimates for the next few years, and beyond that Simply Wall St extrapolates growth, leading to projected free cash flow of roughly $2.7 billion by 2035 as the business scales its vehicle electronics and software platforms.
When all those future cash flows are discounted back, the DCF model arrives at an estimated intrinsic value of about $161.12 per share. Compared with the current market price, this implies an intrinsic discount of roughly 51.8%. This suggests the market is applying a sizable pessimism discount to Aptiv’s long term cash generation potential.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Aptiv is undervalued by 51.8%. Track this in your watchlist or portfolio, or discover 915 more undervalued stocks based on cash flows.
For profitable companies like Aptiv, the Price to Earnings, or PE, ratio is a useful yardstick because it shows how much investors are paying today for each dollar of current earnings. What counts as a normal or fair PE depends on how quickly earnings are expected to grow and how risky those earnings are, with higher growth and lower risk usually justifying a higher multiple.
Aptiv currently trades on a PE of about 56.8x, which is well above both the Auto Components industry average of roughly 19.8x and the peer group average of about 27.7x. On the surface, that makes Aptiv look expensive relative to its sector. However, Simply Wall St’s Fair Ratio framework goes a step further by asking what PE the stock should trade on after adjusting for its specific growth outlook, profitability profile, size and risk characteristics.
On this basis, Aptiv’s Fair PE Ratio is estimated at around 46.8x, which is meaningfully lower than the actual 56.8x. That gap suggests the market is pricing in more optimism than our fundamentals based model supports, even after accounting for its stronger growth prospects and positioning within the industry.
Result: OVERVALUED
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1457 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to attach your story about Aptiv to the numbers by setting your own expectations for its future revenue, earnings and margins. You can then link that story to a financial forecast, a fair value, and a clear buy or sell signal as you compare that fair value with the current price. Simply Wall St’s Community Narratives, used by millions of investors, update dynamically as news or earnings arrive. This means one investor can build a bullish Aptiv Narrative that leans into ADAS growth, Physical AI exposure and a fair value near the top of the current analyst range around 100 dollars, while another can take a more cautious view focused on EDS spin execution risk and auto cycle volatility, anchoring closer to 60 dollars. Both perspectives are visible, testable and easy to refine on the platform’s Community page.
Do you think there’s more to the story for Aptiv? 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.
Companies discussed in this article include APTV.
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