Assessing Cricut Shares After 16% Drop and Recent Market Competition in 2025

If you have been following Cricut’s stock lately, you might be wondering what to make of its recent performance. Maybe you already own shares, or maybe you are just considering whether now is the right time to jump in. Either way, you are probably noticing that the stock has had a bit of a roller-coaster ride in recent months. After all, Cricut closed most recently at $5.51, down 2.8% for the past week and nearly 16% over the past month. Even looking back over the past year, the stock is still showing a decline of 8.3%. That is not the kind of trajectory that inspires automatic confidence, but it can also mean there is hidden value waiting to be unlocked.

In a broader context, Cricut’s challenges are not unique. The market for consumer hobby and creative products has become increasingly competitive, with new entrants and shifting consumer trends keeping investors on their toes. Yet, recent developments in the market, such as growing interest in at-home crafting and creativity-driven side hustles, could eventually shift sentiment in the company's favor if Cricut can capture more of this evolving audience.

So, with sentiment uneasy and recent returns still in the red, what does the valuation picture look like? According to a six-factor undervaluation check, Cricut is identified as undervalued in 2 of the 6 metrics, giving it a valuation score of 2. While that is hardly a slam dunk, it might give cautious optimists a reason to dig deeper, especially if you believe the market has overlooked something.

Next, let us break down exactly how those valuation checks work and why sometimes, looking deeper than the surface numbers can give you the edge you need as an investor.

Cricut scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Cricut Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by forecasting its future cash flows and then discounting them back to today's value. This approach is especially useful for businesses like Cricut, where cash generation can be projected over several years.

For Cricut, current Free Cash Flow (FCF) stands at $249.12 million. Over the next ten years, projections show gradual growth in annual FCF, reaching $329.97 million by 2035. These figures are based on both analyst estimates for the next few years and longer-term extrapolations. The DCF calculation uses these cash flows to estimate what the company is worth in today's dollars.

The resulting estimated intrinsic value per share is $23.20, which is markedly higher than the current share price of $5.51. This implies that based on the DCF analysis, Cricut shares are trading at a 76.3% discount to their fair value, making them look significantly undervalued by this measure.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Cricut is undervalued by 76.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Cricut Price vs Earnings (PE)

For profitable companies like Cricut, the Price-to-Earnings (PE) ratio is a widely used and insightful valuation multiple. It tells investors how much they are paying for each dollar of current earnings, making it especially relevant when the business is generating consistent profit.

When analyzing a company's PE ratio, it is important to consider growth prospects and potential risks. Generally, faster-growing companies or those with more predictable earnings deserve higher PE ratios. Companies facing uncertainty or stagnation are expected to trade at lower ratios to reflect increased risk.

Cricut is currently trading at a PE ratio of 16.3x. For comparison, the average PE ratio among its peers stands at 12.4x, while the broader Consumer Durables industry has an even lower average of 10.4x. At first glance, Cricut seems a bit more expensive than both peers and its industry. However, these benchmarks do not fully incorporate Cricut's unique business attributes or future growth potential.

This is where Simply Wall St's proprietary Fair Ratio comes into play. Unlike basic comparisons, the Fair Ratio accounts for factors such as earnings growth, profitability, market size, and risk profile. By integrating these elements, it aims to provide a more accurate picture of what Cricut’s PE ratio should be given its specific circumstances, rather than relying on generic sector or peer averages.

With the Fair Ratio closely matching the current PE multiple (difference under 0.10), Cricut appears fairly valued on earnings at present levels.

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 Cricut Narrative

Earlier we mentioned there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is a clear, story-driven approach where you outline your perspective on a company, connecting your outlook for its future revenue, earnings, and margins with a fair value that reflects your beliefs. Narratives allow investors to tie the company’s story directly to its financial forecasts, making valuation feel more intuitive and personal. This capability is easily accessible on Simply Wall St’s platform, right within the Community page used by millions of investors worldwide.

With Narratives, you can quickly compare your own fair value for Cricut to the current share price to decide when to buy or sell. Since Narratives update as new information arrives, your analysis always stays relevant. For example, some Cricut investors might project a bullish fair value as high as $25 per share, while others take a more cautious stance closer to $7, depending on their view of Cricut's growth prospects. By harnessing Narratives, you gain a more dynamic and personalized way to make smarter, faster investment decisions.

Do you think there's more to the story for Cricut? 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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