Saab (OM:SAAB B) Could Be 1% Undervalued After GlobalEye Order And Gripen Expansion
What the new GlobalEye and Gripen developments mean for Saab stock
Saab (OM:SAAB B) is back in focus after securing a SEK 10.1b order for two GlobalEye aircraft from a Middle Eastern country, alongside a fresh production framework for additional Gripen jets in Brazil.
See our latest analysis for Saab.
The latest GlobalEye order and expanded Gripen production framework come after a strong run in Saab's stock, with a 15.1% 1 month share price return and a very large 5 year total shareholder return of more than 8x, which signals firm momentum behind the current story.
If these contract wins have you thinking more broadly about defence and high tech themes, it could be worth widening your search with our robotics and automation stocks list through the 35 robotics and automation stocks
Saab now has fresh contracts and a long run of strong shareholder returns behind it. The next step is working out whether that recent enthusiasm leaves the stock looking stretched or still reasonably priced today.
Most Popular Narrative: 1.2% Undervalued
Saab last closed at SEK597.9, which sits slightly below the most followed fair value estimate of SEK604.91, suggesting only a small valuation gap based on current assumptions.
Ongoing expansion in lifecycle services, support and digital contracts (e.g., maintenance, cybersecurity, training via Combitech) is increasing recurring/annuity revenue, a trend that enhances earnings predictability, reduces volatility tied to large equipment sales, and contributes to stable, higher net margins over time.
Curious what underpins that fair value for Saab. The narrative leans on stronger top line growth, firmer margins, and a future earnings multiple that assumes sustained contract momentum without stretching assumptions too far.
Result: Fair Value of SEK604.91 (ABOUT RIGHT)
Have a read of the narrative in full and understand what's behind the forecasts.
However, Saab’s reliance on government defence budgets, along with the ongoing need for heavy upfront investment in new capacity and R&D, could yet challenge that fairly valued story.
Find out about the key risks to this Saab narrative.
Another View on Saab’s valuation
While the popular narrative presents Saab as only 1.2% undervalued, the current P/E of 45.4x tells a different story. That level is higher than the European Aerospace and Defense average of 34.1x, the peer average of 33.5x, and the fair ratio of 43x. This suggests limited margin for error if expectations soften.
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
If this mix of confidence and caution around Saab has you thinking harder about the story, take a moment to review the details yourself and pressure test the assumptions behind them. A helpful place to start is by weighing up the 2 key rewards and 1 important warning sign
Looking for more investment ideas beyond Saab?
Do not stop your research with Saab. The market moves quickly and some of the most interesting opportunities sit outside the obvious large caps.
- Spot potential mispriced opportunities early and size them appropriately by scanning through 222 elite penny stocks with strong financials that already clear basic financial quality checks.
- Zero in on companies that combine quality fundamentals with pricing that still looks reasonable by working through the 257 high quality undervalued stocks.
- Review the 430 dividend fortresses to explore companies that pay dividends alongside potential for capital growth.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com