BUTLER NATIONAL CORP (BUKS) stock intrinsic value fair value estimate & owner earnings analysis

Butler National has two businesses. Aerospace Products (about 62% of fiscal 2026 revenue) modifies business and special-mission aircraft under its own FAA certificates, builds avionics and makes defense-related special mission electronics. Professional Services (about 38%) manages the state-owned Boot Hill Casino in Dodge City, Kansas, including its sports wagering under a contract with DraftKings. Revenue has grown from $44.8 million in fiscal 2016 to $98.0 million in fiscal 2026, roughly 8% a year, and fiscal 2026 (year ended April 30, 2026) operating margin reached 29% versus 20% a year earlier as aircraft modification and special mission electronics sales rose 33%. How we measured earnings. We start from operating cash flow, remove swings in receivables, inventory and payables, and subtract stock given to employees and directors as a real cost. We also subtract maintenance capital spending, which is total capital spending less the portion that supports growth. One-time gains on sales of aircraft and land were excluded because they are not operating cash flow. For years before the October 2021 buyout of the casino subsidiary's minority owners, we deducted their share. Working-capital effects for some earlier years were derived as the remainder after non-cash items rather than added line by line. We then add back the interest the company pays, so the business is valued before its lenders and debt is subtracted separately. Business cash flow per share was about $0.185 in fiscal 2025 and $0.367 in fiscal 2026 (about $23.8 million), up 99%. Starting level. We used the fiscal 2025 to fiscal 2026 midpoint, about $0.276 per share or $17.6 million a year. Earlier years describe a lower-margin business before the aerospace ramp. We did not take fiscal 2026 alone because the jump depended on several large aircraft integrations delivered in one year: a CASA CN-235 with a new sensor package and a Challenger 605/650 special mission aircraft. Year one of the base case assumes no growth from that starting level, below fiscal 2026 actual growth. The first quarter of fiscal 2027 (revenue $30.8 million vs $20.1 million, operating income $7.4 million vs $4.7 million) supports the higher end, but a single quarter does not move our starting level. Cases. Base: $17.6 million a year growing 2% a year through year ten, then tapering to zero over the following ten years. We credit only 2% growth (well under the roughly 8% revenue record) because aerospace backlog rose to $47.1 million from $33.6 million and the company has repeatedly funded new aircraft certificates from its own cash. We left out further margin gains and new markets. The casino management contract was renewed on December 15, 2024 and runs to 2039; nothing is contracted beyond, so the stream tapers. The sports wagering contracts with the Kansas Lottery and DraftKings both expire in 2027 and are assumed renewed here because the company has run them since September 2022 and their revenue grew from $5.8 million to $6.5 million. Business worth about $187 million; net debt about $5 million; value about $183 million, or $2.86 per share. Bear: aerospace reverts to fiscal 2025 economics (cost of sales 65% of revenue vs 53% now), sports wagering is not renewed in 2027, and traditional casino revenue keeps slipping as it did by $1.3 million in fiscal 2026. Business cash flow of $9.5 million a year, declining 2% a year, and ending five years after year ten. Business worth about $74 million; net debt about $5 million; value about $69.5 million, or $1.09 per share. Bull: the fiscal 2026 level holds and is lifted by the backlog to $25.0 million, growing 4% a year (half the historical revenue pace) through year ten and tapering over fifteen years, with sports wagering renewed. Business worth about $326 million; net debt about $5 million; value about $321.5 million, or $5.03 per share. Debt. At July 31, 2026 the company had notes of about $28.0 million (4.35% to 8.13%, including a $20.6 million payment due December 2027 at 4.50% and a $1.6 million note due October 2026) and a $4.0 million finance lease, against $35.3 million of cash. We treated $8.0 million of cash as needed for operations, leaving net debt of about $4.7 million. Cash covers the December 2027 payment without refinancing, so debt does not change the ranking of cases. What could make this wrong. Defense and special-mission work is lumpy: receivables were $14.0 million at April 30, 2026 versus $5.9 million a year earlier, and cash conversion is worth watching. Aerospace certificates are amortized (about $1.4 million a year) and only work if new certificates keep being developed. Since our previous analysis (base $5.23), we no longer assume earnings grow 6% a year and continue indefinitely; we credit only contracted or repeatedly demonstrated growth, taper earnings after year ten, and use a 6% discount rate rather than 10%. That lowers the base case even though results improved.