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If you’ve been tracking Ralph Lauren lately, you know it’s been a headline-maker for all the right reasons. Friends keep asking if it’s too late to buy in or if it’s time to cash out. The truth is, even after the run it’s had, the story isn’t done. Over the past year, this iconic brand’s stock has soared by nearly 70%, and if you zoom out to five years, the gains approach a remarkable 380%. Those numbers are hard to ignore, and when a stock moves like that, it always sparks the question: are we looking at momentum, or something fundamentally undervalued?

Recent months have added fuel to the fire. Ralph Lauren jumped 6.4% in the last week alone, and nearly 4% over the past month. Market chatter has swirled around shifting consumer sentiment, improved luxury retail dynamics, and the ongoing strength of signature brands. All these ingredients feed into the perception of growth, but also raise a classic investing fork in the road: are these moves justified, or are we venturing beyond the company’s true worth?

To start answering that, let’s look at a few ways to value the company. Currently, Ralph Lauren scores a 2 out of 6 on our undervaluation checklist, suggesting opportunities, but also a few caution flags for bargain seekers. In a moment, we’ll break down those checks and what they really mean. And even if you’ve read every valuation metric under the sun, stick around. There’s a smarter, more revealing angle at the end that could give you an edge.

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

Approach 1: Ralph Lauren Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future cash flows and then discounting them back to today’s dollars. This helps investors gauge what a company is truly worth, beyond just its current market price.

For Ralph Lauren, the latest figures show current Free Cash Flow (FCF) at $867 million. Analyst estimates suggest steady growth, with FCF expected to reach $1.17 billion by March 2029. Projections beyond 2029, based on the 2 Stage Free Cash Flow to Equity model, rely on extrapolations rather than direct analyst estimates. This adds a layer of uncertainty the further out you go.

• 2026 FCF estimate: $786 million (discounted to $722 million)
• 2029 FCF estimate: $1.17 billion (discounted to $834 million)
• 2035 FCF projection: $1.66 billion (discounted to $708 million)

The DCF analysis values Ralph Lauren at $336 per share. Compared to today’s price, this implies a 4.1% discount. This means the stock is trading just below its estimated fair value.

Result: ABOUT RIGHT

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

Simply Wall St performs a valuation analysis on every stock in the world every day (check out Ralph Lauren's valuation analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Ralph Lauren Price vs Earnings

The Price-to-Earnings (PE) ratio is a go-to metric when valuing profitable companies like Ralph Lauren, as it tells investors how much they are paying for each dollar of current earnings. It is particularly useful for established brands, where profits provide a solid foundation for future expectations.

What counts as a “normal” PE ratio can vary widely, depending on both a company’s anticipated growth and its risk level. Higher growth prospects or perceived stability usually justify a higher PE, while increased risks tend to pull it lower.

Right now, Ralph Lauren trades at a PE ratio of 24.6x. That is higher than the luxury industry average of 21.5x, but well below the peer average of 63.1x. On the surface, this puts Ralph Lauren somewhere between its broader sector and the hottest names in its space.

Simply Wall St’s proprietary Fair Ratio for Ralph Lauren is calculated at 18.9x. This goes beyond simple averages, factoring in the company’s earnings growth outlook, profit margins, risks, industry nuances, and market capitalization for a more customized view. Because it adjusts for the company’s specific profile, the Fair Ratio offers a truer benchmark for value than simply comparing with peers or industry norms.

Comparing Ralph Lauren’s current 24.6x PE to its Fair Ratio of 18.9x suggests the stock is trading at a premium to what is warranted by fundamentals. The gap is sizable enough to indicate a potential overvaluation.

Result: OVERVALUED

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 Ralph Lauren Narrative

Earlier we mentioned that there's an even better way to look at valuation, so let’s introduce you to Narratives, an intuitive method that links your personal take on Ralph Lauren’s story directly to financial forecasts and fair value estimates. A Narrative is your unique perspective: not just numbers, but the “why” behind them. On Simply Wall St’s Community page, millions of investors use Narratives to connect company news, strategies, and market conditions to forward-looking revenue, profit margins, and share price assumptions, all in a single, unified view.

Narratives allow you to compare your calculated Fair Value for Ralph Lauren to its current market price, helping clarify whether it’s a buy, hold, or sell based on your own reasoning rather than relying on blanket analyst consensus. They are dynamic, updating in real time as new information, earnings, or news emerges, ensuring your perspective stays relevant. For example, while one investor might see Ralph Lauren’s expansion in Asia and robust digital growth justifying a high fair value of $423, another may focus on margin risks and macro uncertainty, resulting in a conservative estimate as low as $185. Narratives empower you to act confidently, armed with your story and your numbers.

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