Is Figure Technology Solutions (FIGR) Pricing Still Justified After Recent Share Price Slump
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If you are trying to work out whether Figure Technology Solutions is attractively priced or just risky at current levels, the starting point is understanding how its market value lines up with its fundamentals.
The stock closed at US$25.28, with returns of a 13.2% decline over 7 days, a 62.8% decline over 30 days and a 42.2% decline year to date, which will likely have changed how some investors view its potential and risk.
Recent news coverage has focused on Figure Technology Solutions as part of broader discussions around listed financial technology platforms and how investors are reassessing growth-oriented names in this space. This backdrop helps explain why the share price has moved sharply over the past month, as sentiment can shift quickly when expectations are reset.
On our checklist of six valuation tests, Figure Technology Solutions scores 0 out of 6 for being undervalued, giving it a valuation score of 0. Next we will look at what different valuation approaches say about the stock and finish by highlighting an even more complete way to think about value.
Figure Technology Solutions scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Excess Returns model looks at how much profit a company can earn on its equity above the return that investors require, then capitalizes those extra profits into an estimate of value per share.
For Figure Technology Solutions, the starting point is a Book Value of US$5.49 per share and a Stable EPS of US$0.78 per share, based on the median return on equity from the past 5 years. The Average Return on Equity is 14.29%, while the Cost of Equity is US$0.43 per share. That leaves an Excess Return of US$0.35 per share, meaning the model assumes the company can earn more on its equity base than investors require, using a Stable Book Value of US$5.49 per share.
When these excess earnings are projected forward and discounted, the Excess Returns model produces an intrinsic value of US$13.27 per share. Compared with the current share price of US$25.28, this implies the stock is 90.5% overvalued on this measure.
For a profitable company, the P/E ratio is a useful way to see how much you are paying for each dollar of earnings, which makes it a straightforward check on whether the share price lines up with the underlying business.
In broad terms, higher growth expectations and lower perceived risk tend to support a higher P/E, while slower growth and higher risk usually point to a lower, more conservative P/E being considered normal. That is why comparing P/E ratios in isolation can be misleading.
Figure Technology Solutions currently trades on a P/E of 40.76x. This sits well above the Consumer Finance industry average P/E of 8.65x and also above the peer group average of 14.19x. On simple comparisons, the stock carries a much richer earnings multiple than both its sector and peers.
Simply Wall St’s Fair Ratio is a proprietary estimate of what a more suitable P/E might be for Figure Technology Solutions, given factors such as its earnings profile, industry, profit margins, market size and specific risks. This tends to be more informative than a basic peer or industry comparison, because it adjusts for the company’s own characteristics rather than assuming all firms deserve similar P/E levels.
However, a Fair Ratio has not been provided here, so it is not possible to formally judge whether the current 40.76x P/E suggests the shares are overvalued, undervalued or about right using this method.
Earlier we mentioned that there is an even better way to understand valuation. Simply Wall St uses Narratives, which let you spell out your story for Figure Technology Solutions, link that story to a set of revenue, earnings and margin forecasts, and compare the Fair Value that story implies with the current price. All of this happens inside the Community page that millions of investors use, with each Narrative automatically updating when fresh news or earnings arrive. There is also room for very different views, such as one investor using the bearish Fair Value of US$43.00 and another using the bullish Fair Value of US$62.00 to decide whether the current share price looks high, low or roughly in line with their own expectations.
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.
