Austal: A Rare Combination Of Growth And Value

Austal (ASB) is positioned for robust growth, anchored by multi-decade U.S., Australian, and AUKUS naval shipbuilding programs. Despite recent share price declines and profit-taking, ASB's current valuation fails to reflect its long-term order visibility and expansion opportunities.

I apply an 11.4x EV/EBITDA multiple, yielding a conservative $5.75 price target and nearly 100% upside versus current levels. Key risks include irregular cash flows, required capacity expansion, and potential for cost overruns and inflationary pressures in naval programs.

Austal is one of the shipbuilders that has significant growth prospects driven by a global expansion of defense budgets. The stock price, however, has lost momentum in January and has never recovered from that.