Is Now the Right Time to Reassess Turning Point Brands After 115% Jump?

If you’re staring at Turning Point Brands and wondering if now is your moment to act, you’re not alone. After years that left many investors rubbing their eyes in disbelief, the stock has delivered a jaw-dropping 115.1% gain over the last year, and a staggering 353.4% over three years. Even with a 12.4% slip over the past month, the year-to-date return sits at a stand-out 45.8%. Moves like these tend to rattle nerves, spark curiosity, and most importantly prompt the inevitable question: is this stock still worth its current price?

Some of this shorter-term volatility can be chalked up to broader shifts in the tobacco and alternative products industry, as regulators tighten their focus and competition intensifies. Still, recent market shake-ups have not derailed the company’s long-term momentum. It’s clear investors are re-evaluating risk, but has Turning Point Brands become a bargain or is this remarkable run already priced in?

To answer that, we’ll dig into the numbers. Turning Point Brands currently scores a 2 out of 6 on our valuation scorecard, meaning it’s undervalued using just two of the major checks investors watch. But numbers only tell part of the story. Next, we’ll break down each valuation approach and see how Turning Point stacks up, then reveal a smarter way to think about valuation you might not have considered.

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

Approach 1: Turning Point Brands Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a method that estimates a company's intrinsic value by projecting its future cash flows and discounting them back to today's dollars. This approach helps investors get a sense of what a stock should be worth based on its ability to generate cash in the future, rather than just on market sentiment or recent earnings.

For Turning Point Brands, the most recent reported Free Cash Flow (FCF) comes in at $53.5 million. Analysts forecast this figure to climb steadily, projecting $70.3 million by 2026. While analysts typically provide estimates up to five years out, further FCF growth for the next decade is extrapolated, with Simply Wall St modeling $86.3 million in 2035. Each annual figure is discounted to reflect its present value, capturing both near-term expectations and long-term growth potential.

Based on this 2 Stage Free Cash Flow to Equity DCF model, the estimated intrinsic value for Turning Point Brands is $79.31 per share. With the current share price trading about 11.5% above this fair value, the model suggests the stock is somewhat overvalued at present levels.

Result: OVERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Turning Point Brands may be overvalued by 11.5%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Turning Point Brands Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used valuation metric for profitable companies because it directly relates a company's share price to its earnings, helping investors assess how much they are paying for each dollar of profit. It is especially useful in industries like tobacco, where most companies produce reliable profits year after year.

Deciding what a "normal" or "fair" PE ratio should be depends on factors like expected earnings growth and the amount of risk investors perceive in the business. Companies with higher future growth prospects or lower risk profiles typically command higher PE ratios, while those facing threats from regulation or declining industries might justify lower ones.

Turning Point Brands currently trades at a PE ratio of 31.2x. That puts it well above the tobacco industry average of 14.9x and even above the average for its direct peers, which sits at 40.3x. However, Simply Wall St's proprietary 'Fair Ratio' model, which weighs factors like earnings growth, industry dynamics, profitability, market cap, and overall risk, estimates a fair PE multiple for Turning Point Brands at just 27.7x.

The Fair Ratio is more insightful than simple peer or industry comparisons because it fine-tunes expectations based on what truly matters to each individual company, rather than broad averages. It accounts for nuances such as how rapidly Turning Point's profits can grow, how risky the company's position is, and how its margins stack up within its market segment.

Given that the current PE ratio of 31.2x is a shade above the Fair Ratio of 27.7x, the market appears to be pricing in a slight premium over what is justified by fundamentals. That suggests the stock is a bit expensive by this measure.

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 Turning Point Brands Narrative

Earlier we mentioned there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your story for a company, connecting your perspective on Turning Point Brands' future—such as what you believe about its upcoming revenue, earnings, and margins—with a transparent financial forecast and an estimated fair value.

Instead of relying on a single number or rigid model, Narratives let you easily express your investment thesis, whether you're optimistic about modern oral growth or cautious about rising competition. Narratives live on Simply Wall St's Community page, helping millions of investors craft, share, and compare different stories for each stock, all backed by numbers, and updated dynamically as new news and earnings come in.

This empowers you to decide when to buy or sell by seeing how your fair value compares to the current price, and to evolve your thesis as new information emerges. For example, one investor might set an ambitious revenue target for Turning Point Brands, based on fast modern oral growth, driving a fair value above the current share price. Another might see regulatory and competition risks as limiting, yielding a more conservative forecast and a fair value below today's price. Narratives help you make smarter, story-driven investment decisions, tailored to your unique view of the future.

Do you think there's more to the story for Turning Point Brands? 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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