Key Stats for Amentum Stock
- Post-Earnings Performance: -8%
- 52-Week Range: $20 to $38
- Valuation Model Target Price: around $35
- Implied Upside: about 55%
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What Happened?
Amentum Holdings stock fell about 8% to $22 per share after its fiscal third-quarter results sharpened the market’s biggest question around the company: whether its large pipeline of government and commercial contracts can translate into stronger revenue growth. Amentum provides engineering and technology services across national security, nuclear energy, space, and critical digital infrastructure, including engineering used to support large AI data centers. Demand remains healthy, with $48 billion in backlog, but contract protests, procurement delays, and older programs winding down have slowed the conversion of new awards into reported sales. Shares closed at $22.43, down 8.22%, on roughly 7 million shares of volume versus a 50-day average of 1.9 million.
Amentum stock fell because weaker-than-expected revenue and a reduced fiscal 2026 sales outlook outweighed an earnings beat and stronger profitability. Fiscal Q3 revenue was $3.49 billion, below the around $3.6 billion analysts expected, while management lowered full-year revenue guidance to $13.8 billion to $13.95 billion as delayed awards and lower materials and nonlabor volume weighed on sales. Amentum simultaneously raised adjusted EBITDA guidance to $1.115 billion to $1.14 billion and adjusted EPS guidance to $2.40 to $2.50, making the selloff primarily a revenue-growth concern rather than evidence that profitability is deteriorating. Management said roughly $175 million of fiscal 2026 revenue was affected by new-business delays.
This week, Amentum also reported $290 million in adjusted EBITDA, a record 8.3% adjusted EBITDA margin, and adjusted EPS of $0.67, up 20% year over year, while funded backlog increased 10% to $6.2 billion. CEO John Heller said operating performance produced “higher-than-anticipated profitability and cash,” while Amentum generated $3.9 billion in net bookings, including more than $1 billion in national security awards, over $400 million in nuclear bookings, and $250 million in critical digital infrastructure awards. Those wins matter because national security provides a large base of government work, while nuclear energy and data-center infrastructure give Amentum faster-growth opportunities tied to new power generation and AI computing capacity.
Amentum competes with government technology and engineering contractors including Leidos and SAIC, making profitability and contract execution useful benchmarks for AMTM. Leidos recently generated $4.6 billion in quarterly revenue, up 7%, with a 13.8% adjusted EBITDA margin, while SAIC reported $1.91 billion in revenue and an 11.6% adjusted EBITDA margin, compared with Amentum’s $3.49 billion in revenue and 8.3% margin. Analyst expectations had also become more cautious before earnings, with JPMorgan lowering its AMTM price target to $31 and Truist cutting its target from $42 to $35. For the rest of 2026, the key test is whether Amentum can turn its backlog into revenue quickly enough to show that the slowdown reflects contract timing rather than structurally weaker demand.
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Is Amentum Undervalued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): around 3%
- Operating Margins: around 6%
- Exit P/E Multiple: around 11x
The model assumes only around 3% annual revenue growth, so the valuation does not require Amentum to suddenly become a high-growth company. The main lever is converting its $48 billion backlog and $32 billion pending-award pipeline into reported sales as protested and delayed contracts begin contributing, while management said roughly 92% of preliminary fiscal 2027 revenue is expected to come from existing or follow-on work.
Nuclear energy could provide one of Amentum’s biggest incremental growth opportunities. The company already generates about $2 billion in annual nuclear revenue, while partnerships with Westinghouse and Rolls-Royce expand its role in designing and deploying new nuclear capacity. The Savannah River initiative adds another potential driver by combining nuclear generation with AI data centers, and management said economics to Amentum could resemble a 2-gigawatt nuclear project generating more than $1 billion in revenue over its life.
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Critical digital infrastructure provides another path to growth as Amentum helps hyperscale technology companies engineer and integrate increasingly complex data centers. Management said the company is already scaling with one hyperscaler, has established an entry point with a second, and is pursuing additional customers, giving the business room to grow as AI infrastructure increases demand for power, engineering, and construction capacity.
The model’s around 6% operating margin assumption also looks reasonable given Amentum’s improving business mix, although operating margin and adjusted EBITDA margin are different measures. Amentum is shifting resources away from low- or no-margin programs toward higher-value technology-enabled and fixed-price work, while almost $700 million in debt repayments over the past 12 months has reduced interest expense. Separately, Q3’s record 8.3% adjusted EBITDA margin, up 60 basis points year over year, provides evidence that underlying profitability is moving in the right direction.
Based on TIKR’s valuation model, AMTM could be worth around $35 per share, implying about 55% upside from a recent price near $22. Amentum appears undervalued under these assumptions, but the discount reflects a real execution question: the clearest path to upside through the rest of 2026 is converting its large backlog into revenue while sustaining margin gains across national security, nuclear energy, and digital infrastructure.
How Much Upside Does AMTM Stock Have From Here?
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All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
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