* Curious if Amer Sports is a bargain, priced to perfection, or somewhere in between? You're definitely not alone. Figuring out whether the current price makes sense is what every investor wants to know.
* Amer Sports' stock has had its share of excitement, climbing 52.9% over the past year but pulling back by 13.1% in the last month and 7.1% just this past week, which may have shaken up risk perceptions or created new opportunities.
* These moves come on the heels of recent headlines highlighting the company's global expansion strategy and product launches, fueling optimism about its growth runway. There has also been attention on changing competitive dynamics in the sportswear market, adding an extra layer of intrigue for long-term investors.
* When it comes to its current valuation, Amer Sports scores a 3 out of 6 based on standard valuation checks. This is decent but not outstanding. We'll dig into what this score really means across different valuation frameworks, and later, we will reveal a smarter, more holistic way to look at value.
Amer Sports delivered 52.9% returns over the last year. See how this stacks up to the rest of the Luxury industry.
Approach 1: Amer Sports Discounted Cash Flow (DCF) Analysis
The Discounted Cash Flow (DCF) model estimates what a business is worth by projecting its future cash flows and discounting them back to today. This provides an intrinsic value grounded in the company's potential to generate cash.
For Amer Sports, the DCF calculation uses a two-stage Free Cash Flow to Equity method. The company's latest reported Free Cash Flow stands at $225.1 Million. Over the next decade, analysts forecast continued rapid growth, with Free Cash Flow expected to reach $983.5 Million by 2029. It is worth noting that only the next five years have analyst-backed estimates. Simply Wall St then extrapolates further growth, extending out to 2035 with projected Free Cash Flow rising as high as $1.9 Billion.
This approach produces an intrinsic value of $40.72 per share. With Amer Sports currently trading at a 27.1% discount to this estimate, the DCF suggests the stock may be notably undervalued by the market right now.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Amer Sports is undervalued by 27.1%. Track this in your watchlist or portfolio, or discover 848 more undervalued stocks based on cash flows.
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Amer Sports.
Approach 2: Amer Sports Price vs Earnings
The Price-to-Earnings (PE) ratio is a widely regarded metric for valuing profitable companies, as it compares a company's current share price to its earnings per share. Typically, higher expected growth and lower risk allow for a higher "fair" PE multiple. In contrast, slower-growing or riskier companies command lower ratios.