Dassault Aviation remains a family-controlled fortress. The Dassault clan holds 62% of the equity; Airbus owns 10%. What little trades freely cannot absorb serious institutional money. For many investors, the story ends there.
The company hardly cares. It generates cash, returns it through huge buybacks, and has no need for external capital. Besides, it will never be acquired. Without a clear catalyst — short of a markedly higher dividend — most funds simply move on.
The valuation invites a second look. At €87 a share, adjusted for €3 billion in excess cash and a 25% stake in Thales worth roughly €4 billion, the market assigns zero value to Dassault’s aviation franchise. That is an odd stance toward a strategic national asset with a full backlog and decades of earnings ahead of it.
Dassault’s moat is not theoretical. It builds Falcons for business aviation and Rafales for governments — products underwritten by sovereign know-how and the diplomatic reach of the French state. After a slow start, Rafale exports have accelerated: UAE, Egypt, India, Greece.
Operational credibility did what brochures never could. On capability per euro, the Rafale comfortably outperforms the Typhoon and Gripen. It also gives countries a credible escape hatch from dependence on either American or Russian hardware.
Yet Dassault Aviation’s multiple refuses to move. This despite revenue rising from €4 billion to €6 billion over a decade, net margins near 10%, and a backlog that stretches twenty years. Few industrial companies enjoy comparable economics and trade at such indifferent valuations.
Why the gap? Excess cash may not be fully deployable, given Dassault’s heavy R&D burden and the looming prospect of another major program. The Thales stake, while listed, is politically too sensitive to sell. Meanwhile, in one more triumph of theology over arithmetic, ESG screens continue to banish defense groups, fundamentals notwithstanding
Even so, the numbers are hard to ignore. Dassault earned €4 billion over the last decade and returned €3 billion to shareholders. Earning power will grow meaningfully as new export wins feed through the production cycle. Against an enterprise value of €4.5 billion — including Thales — the mismatch borders on surreal.
CEO Eric Trappier saw this years ago. From 2014 to 2016, the company bought back a fifth of its own shares. The market yawned, but sound capital allocation often takes time to show its full compounding effect.
Just look at the longevity of other top-tier multirole platforms — the F-16 being the textbook case — and the Rafale’s long runway becomes obvious. Falcon deliveries should recover once Covid-era caution fully fades. Strip out the noise and the investment case looks disarmingly clear: a strategic, highly profitable industrial champion priced as if its best days were already behind it.