Assessing Rockwool After a 15% Drop and Weak Construction Market in 2025

Deciding what to do with Rockwool stock? You are definitely not alone—it is one of those companies that always sparks debate among investors, especially after a stretch of ups and downs that has put everyone on alert. If you have been watching the chart, you know things have been anything but boring. After a relatively flat week, the share price has taken a 15.3% drop over the past month and sits down 5.1% for the year. Over the past year, Rockwool is off 14.6%, but zoom out to three years and you will spot a remarkable 99.4% gain, which is not something you see every day in this sector. The five-year growth stands at 15.5%, a respectable result, but those numbers alone do not tell the whole story.

Some of this recent volatility can be chalked up to shifting market moods about construction-linked businesses as supply chain normalization and changing demand patterns buffet the sector. Yet, you might be wondering whether the company’s undervaluation score truly reflects an underrated opportunity or if risks are mounting. For Rockwool, the valuation score stands at 3 out of 6. In other words, the company looks undervalued based on half of the six key checks analysts use for stocks like this.

Let’s dig into those different valuation methods, examine how Rockwool measures up, and see which approaches really move the needle. And if you stick around until the end, I will share a perspective that sometimes beats them all for understanding true value.

Why Rockwool is lagging behind its peers

Approach 1: Rockwool Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model aims to estimate what a company is worth by projecting its future cash flows and discounting them back to today’s value. For Rockwool, analysts look at the cash that is expected to be generated and use those forecasts to work out what the business might really be worth right now.

Rockwool’s most recent Free Cash Flow stands at €401.5 million, with analyst forecasts and projections anticipating this figure will gradually decline to €287 million by 2029. Estimates for years beyond 2029, for example, up to 2035 and ending at €264 million, are extrapolated and not based on direct analyst coverage. All of these cash flows are considered in millions of euros.

After crunching the numbers using the 2 Stage Free Cash Flow to Equity model, the DCF analysis produces an estimated intrinsic value for Rockwool of €190.71 per share. This suggests Rockwool’s current stock price is about 26.6% above its fair value, implying the stock is currently overvalued according to the DCF framework.

Result: OVERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Rockwool may be overvalued by 26.6%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Rockwool Price vs Earnings

The Price-to-Earnings (PE) ratio is one of the strongest valuation tools for steady, profitable companies like Rockwool because it links how much investors pay for each unit of earnings. It gives a clear reading on whether the stock is cheap or expensive compared to its underlying profits.

A company’s PE ratio is shaped by what the market expects for its future growth and the risks it faces. Higher growth prospects can justify a higher PE, while more uncertainty or industry headwinds typically pull the ratio down. Rockwool’s current PE ratio is 12.73x, considerably lower than the Building industry average of 20.86x and also below the average among peers, which sits at 18.82x. On paper, that might look like a bargain at first glance.

To add more nuance, Simply Wall St’s Fair Ratio for Rockwool is 14.39x. This proprietary benchmark factors in company-specific details such as earnings growth, profit margins, risk profile, its place in the industry, and even market cap, rather than relying only on raw comparisons with sector peers or averages. This makes the Fair Ratio a more meaningful lens for identifying real mispricings.

With Rockwool’s current PE ratio just slightly below its Fair Ratio, the stock appears to be trading pretty close to its justified value based on these fundamentals.

Result: ABOUT RIGHT

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

Upgrade Your Decision Making: Choose your Rockwool Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your story about the company, describing how you see Rockwool’s future playing out, combined with your own expectations for its fair value and estimates for revenue, earnings, and profit margins.

Narratives connect what a business is really doing and why with your financial forecasts, bringing context and conviction to your investment decisions. This approach moves beyond just numbers by encouraging you to tie Rockwool’s opportunities, risks, and industry changes directly to your outlook for its financial future and value.

Narratives are accessible to anyone on Simply Wall St’s Community page, where millions of investors share, test, and refine their views in real time. They help you track your reasoning, see how your fair value compares with others, and, crucially, signal whether Rockwool’s share price is above or below your own estimated fair value, making it easier to decide when to buy, sell, or hold.

Because Narratives are dynamic, they automatically update as new news, earnings, or events emerge, keeping your investment view fresh and grounded in reality. For example, one optimistic investor might anticipate aggressive earnings growth and set a target price of DKK360, while a more cautious peer expects margin pressures to persist and values the company at just DKK249.89. These are two different stories and two distinct Narratives, all driven by the same core data but interpreted through each investor’s lens.

Do you think there's more to the story for Rockwool? Create your own Narrative to let the Community know!

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.

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