Assessing Lufthansa’s Investment Appeal After Strong 21.7% Surge Into 2025
October 8, 2025
If you are sizing up Deutsche Lufthansa stock and wondering what you should do next, you are definitely not alone. In markets like these, every move feels that much more important, and having the right perspective is essential. The last year has been one of surprises for Lufthansa, with a 21.7% rise in the stock over the past twelve months and a notable 19.5% gain year-to-date. That momentum is especially interesting given that the past month actually saw the price dip by 2.6%, which may hint at changing sentiment or simply some turbulence following broader market shifts rather than company-specific news. Even with that short-term softness, the bigger trend is hard to ignore: over five years, Lufthansa shares have handed investors a healthy 44.9% return.
Whether the stock remains an attractive opportunity at current levels depends on its valuation, and Lufthansa’s value score paints a compelling picture. On a 6-point scale where each indicator of undervaluation adds to the score, Lufthansa comes in at an impressive 5 out of 6. This suggests that by most measures, the stock is still trading below its fair value. However, numbers alone rarely tell the full story. Let’s look at the main valuation approaches, and consider what may be an even better way to make sense of Lufthansa’s true worth.
Why Deutsche Lufthansa is lagging behind its peers
A Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by forecasting its future free cash flows and then discounting them to today’s value, reflecting the time value of money. For Deutsche Lufthansa, the DCF approach uses a two-stage Free Cash Flow to Equity model to project what the business might generate for shareholders in the years ahead.
Currently, Lufthansa reports Free Cash Flow (FCF) of €235 million. Analyst and internal projections see this number climbing steadily, with estimates reaching €1.54 billion by 2027. Looking out further, although beyond the window of traditional analyst coverage, extrapolations suggest FCF could top €1.2 billion annually through 2035. All figures are presented in euros to match the company’s reporting currency.
Based on these projections and discounting future cash flows, the DCF model arrives at an intrinsic value of €12.39 per share for Lufthansa. Notably, this represents a substantial 40.6% discount compared to the current market price, meaning the shares are considered significantly undervalued by this measure.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Deutsche Lufthansa is undervalued by 40.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks.
The Price-to-Earnings (PE) ratio is a popular way to assess the value of established, profitable companies like Deutsche Lufthansa. It compares the current share price to the company’s earnings per share, making it a helpful tool for investors because strong, reliably profitable firms often deserve higher PE ratios than those with lower or unstable earnings. However, what is considered a “fair” PE depends on several factors including the company’s expected growth, its level of risk, and wider market sentiment.
At the moment, Deutsche Lufthansa trades at a PE ratio of 5.0x. This stands out as notably lower than both the airline industry average of 9.3x and its peers’ average of 10.7x. While such a low PE could suggest the stock is cheap, it is important to dig deeper to understand if that discount is justified by company-specific factors or if it represents a true bargain.
That is where Simply Wall St’s “Fair Ratio” comes in. Unlike a basic industry comparison, the Fair Ratio (which is 10.9x for Lufthansa) accounts for a tailored mix of elements, including earnings growth potential, risk profile, profit margin, industry realities, and even company size. By capturing this fuller picture, the Fair Ratio offers a more realistic expectation of what Lufthansa’s PE should be. This makes it a more insightful benchmark than industry or peer averages alone.
With Lufthansa’s current PE of 5.0x sitting well below its Fair Ratio of 10.9x, the shares look significantly undervalued on this measure as well.
Result: UNDERVALUED
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.
Earlier, we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a simple, accessible way to express your view of a company’s story by combining your outlook on its business, future earnings, and margins directly with your financial forecast and fair value estimate. Narratives connect the big picture (such as industry trends or company strategy) to numbers (like projected revenue or profit), helping investors see why a specific fair value makes sense for them. On Simply Wall St’s Community page, millions of investors use these Narratives to map their beliefs onto practical financial targets, making it easy to compare your view with others and see how your fair value stacks up against the current market price. What sets Narratives apart is their dynamic nature. When new news or earnings data emerge, your Narrative automatically stays up to date, ensuring your decision making always reflects the latest facts. For example, some investors on Deutsche Lufthansa anticipate upside, projecting fair values as high as €12.0, while others are more cautious, targeting just €5.0. These differences reflect distinct stories and assumptions behind the numbers, empowering you to choose or build the Narrative that fits your beliefs best.
Do you think there’s more to the story for Deutsche Lufthansa? Create your own Narrative to let the Community know!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include LHA.xtra.
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