Is PUMA’s Share Price Slide Creating an Opportunity After the Recent 44% Rebound?

• If you are wondering whether PUMA’s beaten-up share price could actually be a bargain hiding in plain sight, this article will walk through whether the current level makes sense or not.
• The stock has bounced 3.1% over the last week and an impressive 43.6% over the past month, but that is coming off a steep slide, with the shares still down 49.4% year to date and 73.3% over five years.
• That kind of whiplash performance has put PUMA back on investors’ radar, with sentiment swinging between cautious optimism and lingering skepticism. Recent coverage has focused on how the brand is repositioning itself in a brutally competitive sportswear market and whether management’s strategic moves can restore growth momentum after several tough years.
• On our checks, PUMA currently scores 3 out of 6 for undervaluation. This suggests that parts of the business look attractively priced while others still need scrutiny. Next we will look at how different valuation methods view the stock, and then circle back to a way of thinking about value that goes beyond any single model.

Find out why PUMA's -49.4% return over the last year is lagging behind its peers.

Approach 1: PUMA Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth by projecting the cash it can generate in the future and then discounting those cash flows back to today in € terms.

For PUMA, the model starts from a difficult base, with last twelve month free cash flow of about €13.4 Million in the red. Analysts expect a recovery, with free cash flow projected to reach around €223.0 Million by 2035. The early years out to 2028 are based on analyst estimates, while the later years are extrapolated, assuming growth tapers to more modest levels over time.

Using a 2 Stage Free Cash Flow to Equity approach, these projected cash flows are discounted to an estimated intrinsic value of roughly €20.70 per share. That is about 8.3% below the current share price, which implies the stock screens as slightly overvalued on this model, but not dramatically so.

Result: ABOUT RIGHT

PUMA is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for PUMA.

Approach 2: PUMA Price vs Sales

For consumer brands like PUMA, where profits can swing with marketing cycles and input costs, the Price to Sales ratio is often a cleaner way to judge value because it focuses on how much investors are paying for each euro of revenue, which tends to be more stable than earnings.

In general, companies with stronger growth prospects and lower risk can justify a higher multiple, while slower growth or higher uncertainty should translate into a lower, more conservative ratio. PUMA currently trades on a Price to Sales multiple of about 0.39x, which is well below both the Luxury industry average of roughly 0.82x and the peer group average of about 1.00x. Simply Wall St’s proprietary Fair Ratio for PUMA, which blends in factors like its expected growth, profit margins, risk profile, industry and size, comes in at around 0.67x. This makes it more tailored than a simple comparison with peers or the sector, which can miss company specific strengths or weaknesses. With PUMA’s actual multiple sitting notably below this Fair Ratio, the stock appears attractively priced on a sales basis. This suggests the market may be under appreciating its recovery potential.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1465 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your PUMA Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple framework that lets you attach a clear story to your numbers, including what you think PUMA is fairly worth and how you expect its revenue, earnings and margins to evolve. A Narrative connects three pieces in one place: the company’s story, a financial forecast, and the resulting fair value estimate, so you can see exactly how your view of the business translates into a price. Narratives are built directly into Simply Wall St’s Community page, where millions of investors can create and share their views in an accessible, guided format. Once you have a Narrative, the platform continuously compares its Fair Value to PUMA’s live market price to help you judge whether it looks like a buy, hold or sell, and it automatically refreshes when new information like earnings or major news is released. For example, one PUMA Narrative might assume a strong brand turnaround and higher margins, leading to a much higher fair value, while another might price in slow growth and weaker profitability, landing on a far more conservative estimate.

Do you think there's more to the story for PUMA? Head over to our Community to see what others are saying!

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com