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If you are wondering whether Adient’s current share price offers good value or is already pricing in most of the upside, you are not alone.
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Over the last week the stock returned 15.0%, with 23.5% over the last month, 23.0% year to date and 36.7% over the last year. This is set against longer term returns of negative 44.8% over three years and negative 33.6% over five years.
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Recent coverage has focused on Adient as an established auto seating supplier, with investors paying closer attention to how the company is positioned in global vehicle production trends and supply chain shifts. This context has helped frame the recent share price moves as the market reassesses the risk and reward trade off for the stock.
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Adient currently scores 5/6 on our valuation checks. We will break this down using several common valuation methods before finishing with a way of looking at value that can give you an even clearer long term view.
A Discounted Cash Flow, or DCF, model estimates what a company could be worth by projecting its future cash flows and then discounting those back to today in dollar terms.
For Adient, the model used is a 2 Stage Free Cash Flow to Equity approach. The company’s latest twelve month free cash flow is about $200.4 million. Analysts provide explicit free cash flow estimates through 2030, with Simply Wall St extrapolating further. For example, projected free cash flow for 2030 is $751 million, with intermediate years such as 2026 and 2027 at $110.9 million and $314.5 million respectively, all discounted back to today to reflect risk and the time value of money.
When these discounted cash flows are summed, the model arrives at an estimated intrinsic value of $71.15 per share. Compared with the current share price, this output suggests the stock is 67.1% undervalued according to this DCF model.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Adient is undervalued by 67.1%. Track this in your watchlist or portfolio, or discover 868 more undervalued stocks based on cash flows.
For companies where profitability can be uneven, investors often look at revenue based metrics like the P/S ratio, because sales tend to be more stable than earnings and still reflect how the market values the business.
In general, higher growth expectations and lower risk can support a higher “normal” P/S multiple, while slower growth or higher risk usually call for a lower multiple. It therefore helps to compare Adient’s P/S ratio with relevant benchmarks rather than in isolation.
Adient is currently trading on a P/S of 0.13x, compared with the Auto Components industry average of 0.81x and a peer group average of 1.39x. Simply Wall St’s “Fair Ratio” for Adient is 0.33x, which is an estimate of what the P/S might be given factors such as earnings growth, industry, profit margin, market cap and risks.
This Fair Ratio can be more informative than a simple peer or industry comparison because it adjusts for the company’s specific profile instead of assuming all businesses in the group deserve similar multiples. On this basis, Adient’s current P/S of 0.13x sits below the Fair Ratio of 0.33x, which indicates that the shares appear undervalued on this metric.
Result: UNDERVALUED
P/S ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1445 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, which let you set out your story for Adient by linking your assumptions about its future revenue, earnings, margins and fair value to a simple forecast. You can compare that forecast with today’s price inside the Narratives tool on Simply Wall St’s Community page, where views are kept current as new earnings or news arrive. For example, one Adient Narrative might focus on margin gains, China expansion and a fair value closer to the US$64 high analyst target. Another might stress volume and margin risks, with a fair value nearer the US$17 low target, helping you decide whether the current price looks high, low or about right for your own stance.
Do you think there’s more to the story for Adient? 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 ADNT.
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