Loar Holdings Inc. (LOAR): what the price assumes

In the published model solve dated 2026-Q2, anchored at $66.86, Loar Holdings Inc. (LOAR) is priced for today's economics sustained for ~15.2 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/LOAR

Headline

FieldValue
TickerLOAR
CompanyLoar Holdings Inc.
Current price$66.86/sh
CompositionCommercial aerospace OEM 16% / Commercial aerospace aftermarket 29% / Business jet & general aviation OEM 15% / Business jet & general aviation aftermarket 10% / Total defense OEM 11% / Total defense aftermarket 13% / Total other OEM 3% / Total other aftermarket 3%

What The Price Assumes (Inversion)

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

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)24.4%
Operating margin today21.1%
Margin expansion (value-band)+3.3pp
Must persist for15.2y
Multiple paid63x operating income

The operating-margin figure is value-band context at year 5: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 10.9% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.4 years.

Reconcile: at the x-ray's 9.3% required return this reads ~11.5 years; the models below use their own rates.

How unusual the bet is: high

ReferenceValue
cohort percentile (of 222 peers)96
sustained it ~10 years at this level14%
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

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
Asset10.06x4expensive
Earnings8.71x3expensive
Relative2.69x5expensive
Growth0.83x3justifies

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

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.

Per-Model Detail (n=15)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$53.201.26xyesFCF base $0.1B, growth 25% (input: historical growth), terminal g 4.0%, WACC 8.2%, 7yr projection
DCF Exit MultipleGrowth$80.570.83xyesExit EV/EBITDA: 60.2x / 62.2x / 64.2x (bear / base = today's held flat / bull), 7yr
Relative ValuationRelative$31.392.13xyesP/E 43.63x (blended: static sector reference 22x + trailing (TTM) 94x), scenarios: 35.0x / 43.6x / 52.3x (bear / base = reference held flat / bull), EV/EBITDA 28.45x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$7.688.71xyesBV/sh $12.34, ROE (TTM) 5.8%, ke 9.3%
Two-Stage Excess ReturnAsset$5.8611.41xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$88.230.76xyesRev $0.5B, growth 26% (input: historical growth; tapered), Terminal P/S: 9.5x / 11.9x / 14.3x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$24.852.69xyesEPS $0.71, growth 35% (input: historical EPS growth), PEG=2.69 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$0.38175.96xyesNormalized EBIT (3y avg op income, one-time charges added back) $0.10B × (1−25%) / WACC 8.2% → EPV (no growth) (excluded from median)
Residual IncomeAsset$5.6311.88xyesBV $12.34 + 5yr PV of (ROE (TTM) 5.8% − Kₑ 9.3%) × BV; BV grows 3.7%/yr
Graham NumberAsset$14.044.76xyes√(22.5 × EPS $0.71 × BVPS $12.34) — Graham's conservative floor
EV/EBITDA RelativeRelative$8.028.34xyesEBITDA $0.12B × sector EV/EBITDA 14.0x
FCF YieldEarnings$3.8917.19xyesFCF $114.8M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$2.0632.46xyesSBC-adj FCF $0.10B (FCF $0.11B − SBC $0.02B) capitalized at Kₑ (excluded from median)
Ben Graham FormulaEarnings$22.912.92xyesEPS $0.71 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$1.8536.14xyesBV $12.34 × (ROIC 1.2% / WACC 8.2%) (excluded from median)
P/Sales SectorRelative$11.245.95xyesRevenue $0.54B × sector P/S 2.0x
PEG Fair ValueRelative$26.632.51xyesEPS $0.71 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$7.688.71xyesEPS $0.71 / 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$858.3m
Net debt / NOPAT (after-tax)10.04x
Net debt / operating income (pre-tax)7.55x
Interest coverage3.0x
Burning cashno

Bullet Takeaways

Bull Case

The way to read Loar is through its capital allocation, because the entire model is a disciplined machine for buying and improving niche aerospace parts businesses. Loar acquires small, proprietary component makers, folds them into its platform, and lifts their margins, and the 10-K describes the playbook plainly: it looks for acquisitions that offer "an opportunity to leverage customer relationships or product overlaps and drive new, profitable revenue streams" alongside continuous new product development. In the most recent quarter the company completed two acquisitions, LMB Fans and Motors and Harper Engineering, while simultaneously lifting its adjusted EBITDA margin to a record 40.5%. A 40%-plus margin on aerospace components is the signature of pricing power, and pricing power in this niche comes from being the sole-source supplier of small parts that are essential but too specialized for competitors to bother replicating.

The economics are unusually attractive because of what these parts are. The 10-K notes the components are "essential for the production and maintenance of aircraft" given "the high costs typically associated with the stoppage" of an aircraft, which is the heart of the moat: a part that costs little but whose absence grounds a multi-million-dollar aircraft commands pricing far above its manufacturing cost, especially in the aftermarket where airlines must buy from the certified original supplier. That aftermarket revenue is recurring and high-margin, the annuity that makes the whole roll-up compound. The demand backdrop is supportive on both ends: commercial aerospace is in a multi-year up-cycle as airlines expand fleets, and defense spending is rising with global tensions, which Loar's filing flags as a tailwind from "increased global defense spending."

The growth is delivering and broadening. Q1 2026 net sales rose 36.1% to $156.1 million, with organic sales up 11% and adjusted EBITDA up 46.6% to $63.2 million, and management raised full-year guidance to $645 to $655 million in sales. The combination of double-digit organic growth, accretive acquisitions, and expanding margins is exactly the profile that justifies a premium multiple in this space, and it follows the template that has made the best aerospace-component roll-ups extraordinary long-term compounders. The bull case is that Loar is early in that compounding journey with a long runway of small targets to acquire and a margin profile that proves the model works.

Bear Case

The moat Loar relies on is real, but the bear case is that it is being priced as if it can never erode, and erosion in this business comes from the supply of acquisitions drying up and from leverage straining the machine. The roll-up model works only as long as there are attractive niche targets to buy at sensible prices, and as Loar grows, each acquisition moves the needle less while the universe of un-acquired niche component makers shrinks and competing acquirers bid the same assets up. Organic growth of 11% is healthy, but it is a fraction of the total 36% growth, which means the company is heavily dependent on continued dealmaking to hit the trajectory the price assumes. A roll-up that runs out of accretive deals reverts to its organic rate, and 11% does not support a 65-times multiple.

The leverage is the mechanism that turns a deceleration into a problem. Net debt sits at roughly $858 million, more than seven times trailing operating income, with only about $95 million of liquid assets. That is acquisition debt, and it is the fuel for the model: Loar borrows to buy, improves the target's margin, then borrows again. The strategy is elegant while credit is available and cheap and while the acquired businesses perform, but it removes the cushion. A rise in financing costs, an integration that disappoints, or a commercial-aerospace cycle that turns would all pressure a balance sheet that is leveraged precisely because the growth strategy requires it. The bear does not have to assume a crisis; it only has to note that a seven-times-leveraged roll-up has far less margin for error than its smooth margin chart suggests.

Now hold the price against the demonstrated economics, and the gap is severe. At roughly 65 times company-wide operating income, the price requires growth held at the self-funding ceiling for about 16 years, a persistence only about 14% of comparable fast-growers have ever achieved. Only the forward-growth lens reaches the price, and only by crediting aggressive sustained growth; the asset-value methods land at roughly a tenth of the price, the earnings-power methods near a ninth, and even the peer-multiple lens, on a blended P/E near 46 times, lands well below the price. The trailing P/E above 100 times underscores it. This is a business priced for perfection over a decade and a half, funded by debt, dependent on a continuous supply of acquisitions, in a cyclical end market. The components are genuinely sticky and the margins genuinely high, but the bear case is that none of that justifies paying 65 times operating income for a leveraged roll-up whose organic engine runs at a fraction of the priced-in rate.

Valuation

Loar is priced for a long, uninterrupted compounding run. At roughly 65 times company-wide operating income, the price implies growth held at the self-funding ceiling for about 16 years, which is the most demanding kind of duration assumption: not a high rate for a few years, but a sustained ceiling-rate expansion for the better part of two decades. Only about 14% of comparable fast-growers have ever sustained that pace for even a decade, which is why the inversion flags the assumption as elevated, above what the fundamentals comfortably support.

The method split is lopsided. Only the forward-growth lens reaches the price, and it does so through its exit-multiple variant, which holds an EV/EBITDA multiple above 60 times flat for the forecast, an assumption that is itself the entire bet. The perpetual-growth DCF, even crediting 25% growth, lands below the price. Every static frame reads the stock as expensive by a wide margin: the asset-value methods land near a tenth of the price because the equity base is thin relative to the acquisition-inflated enterprise value, the earnings-power methods land near a ninth, and the peer-multiple lens, on a blended P/E near 46 times that already includes an elevated trailing multiple, still sits well below the price. The honest read is that the demonstrated economics support a small fraction of today's price, and the premium is entirely the market crediting the roll-up's future compounding.

The cohort comparison places the bet among aggressive aerospace and defense growth names. The peer set, Karman Holdings, Astronics, Kratos, AeroVironment, and Redwire, includes other high-multiple defense-tech and components stories the market prices on growth, and Loar sits at the stretched end on operating-income multiple. The solvency frame is the constraint that distinguishes Loar from an asset-light compounder: net debt above seven times operating income means the equity is a levered claim, and the model's reliance on debt-funded acquisitions ties its growth to continued access to cheap capital. The decisive fact is the multiple against the leverage and the deal dependence. The buyer at this price is underwriting that Loar sustains ceiling-rate growth for 16 years, funds it with debt without strain, and keeps finding accretive niche acquisitions, a chain of assumptions where any single break, a credit-cost rise, a soured deal, an aerospace down-cycle, removes the support the static methods say is already absent.

Catalysts

The Q1 2026 print was a record across the board and triggered a guidance raise. Net sales grew 36.1% to $156.1 million, adjusted EBITDA grew 46.6% to $63.2 million at a record 40.5% margin, and adjusted EPS of $0.34 beat consensus sharply, while GAAP diluted EPS was $0.12. Net organic sales rose 11%, with the balance coming from acquisitions, and management raised full-year 2026 guidance to sales of $645 to $655 million and adjusted EBITDA of $257 to $262 million, citing commercial aerospace strength offsetting softer defense.

Acquisitions are the central catalyst because they are the model. In the quarter Loar completed the purchases of LMB Fans and Motors and Harper Engineering, expanding the component portfolio. The pace and price of future deals are the most important variable for the trajectory, since the roll-up depends on a continuous pipeline of accretive niche targets; a quarter without a deal, or a deal at a stretched price, would shift the burden onto the organic engine. Management guided commercial original-equipment and aftermarket sales to grow in the low double digits with defense up mid-single digits, so the mix tilts toward the commercial up-cycle.

The watch items are the leading indicators of the two bear risks. Track organic growth as a standalone figure, since it is the rate the company reverts to if dealmaking slows, and watch the cadence and multiples of new acquisitions, the lifeblood of the strategy. Watch the leverage ratio and financing costs, because the debt-funded model is most exposed if credit tightens or an integration disappoints. And watch the commercial-aerospace cycle, the demand backdrop that the premium multiple assumes stays favorable. For a leveraged roll-up priced for 16 years of ceiling-rate growth, the catalysts that matter most are the ones that test whether the acquisition machine and the balance sheet can keep running at the pace the valuation already assumes.

Peer Cohorts (Per Segment, With Filing Citations)

Loar Holdings (aerospace & defense components) (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

Q1 FY2026 earnings release · FY2024 10-K

View the full interactive LOAR report on boothcheck