Key Takeaways:
- The 2-Minute Valuation Model values Adient stock at $27 per share in 2 years.
- That’s a potential 69% upside from today’s price of $16 per share, which would translate to 30% annual returns over the next two years.
- The auto stock is projected to grow EPS by 94% over the next 3 years as auto production normalizes.
- The automotive supplier stock is trading at historically low valuations despite successfully navigating tariff challenges and driving operational improvements.
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Adient (ADNT) is the world’s largest automotive seating supplier, providing innovative seating solutions and automotive interiors to major OEMs across the globe.
With operations spanning the Americas, EMEA, and Asia-Pacific regions, Adient serves virtually every major automaker through its comprehensive manufacturing footprint and engineering expertise.
Adient has successfully positioned itself as a leader in next-generation automotive seating technologies, including electrification and autonomous vehicle solutions.
With the auto stock now trading at $16 per share, Adient presents a compelling opportunity for investors seeking exposure to the automotive recovery story, enhanced by the company’s proven ability to navigate industry challenges while driving margin improvements through operational excellence.
Let’s examine why this automotive supplier could deliver substantial returns as it benefits from volume recovery, tariff mitigation strategies, and continued operational improvements across all regions.
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What is the 2-Minute Valuation Model?
Three core factors drive a stock’s long-term value:
- Revenue Growth: How big the business becomes.
- Margins: How much the business earns in profit.
- Multiple: How much investors are willing to pay for a business’s earnings.
Our 2-Minute Valuation Model uses a simple formula to value stocks:
Expected Normalized EPS * Forward P/E ratio = Expected Share Price
Revenue growth and margins drive a company’s long-term normalized earnings-per-share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.
Why the Auto Stock Looks Undervalued
Forecast
Based on analyst estimates, Adient is expected to achieve strong earnings recovery over the next three years as automotive production normalizes and operational improvements continue.
EPS is projected to surge from $1.84 in 2024 to $3.57 by 2027, representing a 94% increase over three years. The growth trajectory indicates an accelerating recovery following recent challenges.
Following a 14% decline in EPS in 2024, Adient is expected to deliver a modest decline of 5% in 2025 to $1.75, followed by strong acceleration with 26% growth in 2026 to $2.20 and 62% growth in 2027 to $3.57.
This earnings growth for ADNT stock is likely to be driven by:
- Automotive volume recovery: Normalization of customer production schedules and industry stabilization.
- Tariff mitigation success: 75% of tariff exposure has already been resolved, and comprehensive action plans are being implemented for the remaining exposure.
- Operational excellence: Continued margin expansion through efficiency improvements and cost reduction initiatives.
- Geographic diversification: USMCA compliance benefits and global footprint providing flexibility.
- Product mix improvement: Rolling off lower-margin metals business and focusing on higher-margin opportunities.
- China market growth: Winning new business with local Chinese OEMs as they expand globally.
For our valuation, we’ll estimate that the auto stock will reach $3.00 in EPS by fiscal 2027.
See Adient’s full analyst estimates and growth forecast (It’s free) >>>
Valuation Multiple
As shown in the valuation chart, Adient stock trades at approximately 10x forward earnings, which is below its five-year historical average P/E of 11.5x.
For our valuation, we’ll use a conservative forward P/E multiple of 9x. This is well below the company’s historical average and slightly below the current multiple, which is relatively inexpensive given Adient’s expected annual earnings growth of nearly 25%.
Fair Value of ADNT Stock
Using our 2-Minute Valuation Model and applying a conservative approach:
- Conservative 2027 EPS estimate: $3.00
- Conservative forward P/E multiple: 9x
Expected Normalized EPS ($3.00) * Forward P/E ratio (9x) = Expected Share Price ($27)
The 2-year expected Adient stock price we would get from this valuation is $27 per share.
ADNT stock is currently trading at around $16 per share, which implies a potential upside of 69% over the next two years or a 30% annualized return.
A 30% annual return for investors would be exceptional, considering the S&P 500 index has delivered approximately 10% annual returns over the last six decades.
Moreover, if the auto stock is priced at 20x earnings (which isn’t outside the realm of possibility), it could trade around $60, indicating an upside potential of over 250% in the next two years.
Remember, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.
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What is the Average Analyst Price Target for Adient Stock?
Analysts believe Adient stock is undervalued, with an average price target of nearly $22 per share. That implies that analysts see approximately 37% upside from its current trading price.
Risks to Consider
Despite the bullish outlook, investors should be aware of several risks that could impact the auto company’s growth trajectory:
- Automotive cyclicality: Vehicle production volumes remain sensitive to economic conditions and consumer demand.
- Tariff policy uncertainty: Changes to current trade policies could impact cost structure and customer relationships.
- Competition intensity: Ongoing pressure in the automotive supply chain and pricing negotiations with OEMs.
- Geographic exposure: Vulnerability to regional economic downturns, particularly in Europe and China markets.
TIKR Takeaway
Adient presents a compelling value opportunity at current levels. The auto supplier stock’s upside potential is driven by its market-leading position in automotive seating, successful tariff mitigation strategies, ongoing operational improvements across all regions, and positioning for automotive volume recovery, all while trading at historically attractive multiples.
While ADNT faces typical automotive supplier headwinds from cyclical demand and trade policy uncertainty, its global manufacturing footprint, diversified customer relationships, and proven operational excellence position it uniquely to benefit from the automotive industry’s recovery and capitalize on growth opportunities arising from changing industry dynamics.
Is Adient stock a buy over the next 24 months? Use TIKR to check the stock’s analyst price targets and growth forecasts to see if it is undervalued today.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
