Amentum Holdings, Inc. (AMTM): what the price requires

At today's price, Amentum Holdings, Inc. (AMTM) is priced for +3.9% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/AMTM

Headline

FieldValue
TickerAMTM
CompanyAmentum Holdings, Inc.
Current price$20.51/sh
CompositionCost-plus-fee 62% / Fixed-price 24% / Time-and-materials 13%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed2.3%
Operating margin today3.6%
Margin compression implied-1.3pp
Implied growth3.9%
Multiple paid17x operating income

The operating-margin requirement is derived from the framework's value band at year 5, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 8.1% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.8pp.

Reconcile: at the x-ray's 9.3% required return this reads ~11.3%/yr; the models below use their own rates.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
cohort percentile (of 212 peers)45
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset5.19x5expensive
Earnings3.66x4expensive
Relative1.14x5expensive
Growth0.48x3justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.7%); the inversion above states its own rate.

Per-Model Detail (n=17)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$137.510.15xyesFCF base $0.5B, growth 25% (input: historical growth), terminal g 4.0%, WACC 6.7%, 7yr projection
DCF Exit MultipleGrowth$42.530.48xyesExit EV/EBITDA: 12.1x / 15.1x / 18.1x (bear / base = today's held flat / bull), 7yr
Relative ValuationRelative$17.691.16xyesP/E 24.18x (blended: static sector reference 20x + trailing (TTM) 34x), scenarios: 19.3x / 24.2x / 29.0x (bear / base = reference held flat / bull), EV/EBITDA 14x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$6.533.14xyesBV/sh $18.81, ROE (TTM) 3.2%, ke 9.3%
Two-Stage Excess ReturnAsset$3.955.19xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$29.750.69xyesRev $14.2B, growth 30% (input: historical growth; tapered), Terminal P/S: 0.3x / 0.4x / 0.4x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$7.202.85xyesEPS $0.60, growth 2% (input: historical EPS growth), PEG=16.97 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$0.012050.50xyesNormalized EBIT (latest-period EBIT; under 3y history) $0.15B × (1−31%) / WACC 6.7% → EPV (no growth) (excluded from median)
Residual IncomeAsset$2.956.95xyesBV $18.81 + 5yr PV of (ROE (TTM) 3.2% − Kₑ 9.3%) × BV; BV grows 2.1%/yr
Graham NumberAsset$15.941.29xyes√(22.5 × EPS $0.60 × BVPS $18.81) — Graham's conservative floor
EV/EBITDA RelativeRelative$17.961.14xyesEBITDA $0.57B × sector EV/EBITDA 14.0x
FCF YieldEarnings$4.934.16xyesFCF $439.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$3.695.56xyesSBC-adj FCF $0.41B (FCF $0.44B − SBC $0.03B) capitalized at Kₑ
Ben Graham FormulaEarnings$19.361.06xyesEPS $0.60 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$3.605.70xyesBV $18.81 × (ROIC 1.3% / WACC 6.7%)
P/Sales SectorRelative$86.940.24xyesRevenue $14.20B × sector P/S 1.5x
PEG Fair ValueRelative$22.500.91xyesEPS $0.60 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$6.493.16xyesEPS $0.60 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$3.5b
Net debt / NOPAT (after-tax)10.07x
Net debt / operating income (pre-tax)6.97x
Share count CAGR (dilution)55.7%
Burning cashno

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

Bull Case

The single most decisive metric for Amentum is its backlog, because in a services business it is the closest thing to revenue you can see before it arrives. Total backlog reached a record of nearly $48 billion, supported by about $4 billion in net bookings across nuclear, aviation, intelligence, and digital infrastructure, with funded backlog of $6.9 billion up 20% year over year. Against full-year revenue guidance of roughly $14 billion, that backlog represents several years of work already booked. For a company priced for mid-single-digit operating growth, that visibility is the foundation: the growth assumption rests on contracts already won, not on a pipeline that has to materialize.

The contract-mix shift is the quieter part of the bull case, and it goes directly to margins. Today the revenue is about 62% cost-plus-fee, where the customer reimburses costs plus a set fee, with 24% fixed-price and 13% time-and-materials. Cost-plus work is low-risk but also low-margin; fixed-price work, where Amentum keeps the savings if it executes well, carries higher margin potential. As management steers more of the book toward fixed-price, the operating margin can expand on the same revenue base, which is exactly the lever a thin-margin services company needs to grow profit faster than revenue.

The demand backdrop is durable in a way few commercial businesses are. The filing is explicit that "U.S. federal government contracts will continue to be the primary source of our revenues for the foreseeable future," and that work spans mission-critical areas like nuclear cleanup, defense, and intelligence that persist across budget cycles and administrations. These are not discretionary programs that vanish in a downturn; they are long-dated obligations the government funds because it must. A contractor embedded in that work, with a record backlog and a shift toward better-margin contracts, is positioned to compound steadily even in a slow-growth services market.

Bear Case

Begin with the qualitative reality: Amentum is a thin-margin services contractor carrying spinoff-era debt, and the price already assumes the margin story works. Operating margin runs about 3.7%, which leaves little room for error, and the company carries net debt of roughly $3.5 billion against trailing operating income of about $527 million, more than six times that operating income. The deleveraging-and-margin-expansion thesis is plausible, but it is a thesis layered on a business with almost no margin cushion, and at this leverage a couple of underperforming contracts or a slower fixed-price transition would show up quickly in the equity.

The customer is the concentration risk, and it cuts deeper than ordinary client dependence. Substantially all of Amentum's revenue comes from the U.S. federal government, and the filing is blunt that "substantially all of our contracts, including our U.S. federal government contracts, are subject to cancellation, termination, or suspension at the discretion of the customer." A record backlog looks reassuring until you remember that the customer can cancel for convenience, and government services revenue is exposed to budget standoffs, continuing resolutions, and shifting administration priorities. The funded portion of the backlog, $6.9 billion, is the part actually appropriated; the rest depends on future funding decisions that no contractor controls. Add the operational risk the filing flags, where failure to document claims and change orders means the company will "likely incur cost overruns, reduced profi"ts, and the execution downside on fixed-price work becomes concrete.

The valuation does not leave much margin for any of this. The asset-value and earnings-power lenses both read the price as expensive; only the relative-multiple and growth methods justify it, and the growth method depends on the very margin expansion the bear is questioning. At about 18 times operating income for a sub-4%-margin federal contractor, the price credits a smooth transition to higher-margin work, continued backlog conversion, and a stable federal funding environment all at once. The bear case is not that the business is weak; it is that a leveraged, low-margin contractor dependent on a single customer that can cancel at will is priced for everything to go right.

Valuation

At the current price the market pays about 18 times company-wide operating income, which inverts to roughly 5.6% operating growth a year for five years. For a government-services contractor with a record backlog, that growth rate is achievable on visibility alone; the real question buried in the price is margin, because at a 3.7% operating margin today, the path to a richer valuation runs through the contract-mix shift toward fixed-price work rather than through revenue growth by itself. The price is betting that both the backlog converts and the margin expands.

The methods we use to triangulate point in one direction with a single dissent that defines the bet. The asset-value lens reads the price well above the company's net assets, and the earnings-power lens, capitalizing today's slim operating earnings, reads it as expensive. Those two say the current business does not support the price. Only the relative-multiple and forward-growth lenses reach it, the latter by crediting the margin and backlog story. When the static methods say expensive and only the forward-looking ones defend the level, the price is a forward bet on execution, with little asset or earnings floor beneath it. For a recently independent contractor, that is the honest characterization: the valuation leans on a transition that has barely begun to show in the margin line.

Solvency is the load-bearing constraint and belongs in the close. Net debt near $3.5 billion against operating income of about $527 million is real leverage for a thin-margin business, and the company also maintains a revolving credit facility with several hundred million of available capacity for liquidity. At this leverage the path of operating income decides the equity: margin expansion deleverages the company and lifts the stock, while a stall does the reverse. The decisive fact is not the growth rate the price requires; it is that a low-margin, debt-funded federal contractor has to execute the fixed-price transition and keep the backlog converting, against a single customer that can cancel at its discretion, for the valuation to hold.

Catalysts

The most recent print supported the thesis and the guidance. Amentum reported second-quarter fiscal 2026 revenue of $3.48 billion and net income of $54 million, with EPS of $0.60 coming in above consensus, and reaffirmed full-year 2026 revenue guidance of $13.95 billion to $14.3 billion. For a contractor whose value rests on visibility, an in-line-to-better quarter with reaffirmed guidance is the steady result the story needs.

The catalyst that matters most is bookings, because backlog is the leading indicator of future revenue. Total backlog reached a record of nearly $48 billion on about $4 billion of net bookings across nuclear, aviation, intelligence, and digital infrastructure, including several multi-year contracts, with funded backlog up 20% to $6.9 billion. The watch list follows directly from the bull-bear tension: the pace of new bookings that refills the backlog, the share of revenue shifting from cost-plus to higher-margin fixed-price work, and the federal funding environment, since continuing resolutions or budget standoffs can slow the conversion of even a record backlog into cash.

Peer Cohorts (Per Segment, With Filing Citations)

Digital Solutions (reported)

Global Engineering Solutions (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Amentum Q1 FY2026 results, 8-K · Amentum 10-K · Amentum FY2026 results, 8-K

View the full interactive AMTM report on boothcheck