Solstice Advanced Materials (SOLS): Assessing Valuation After New S&P and Russell Index Additions

Solstice Advanced Materials (SOLS) just pulled off a quirky index shuffle, getting dropped from the S&P 500 Equal Weighted, then quickly added to both the S&P 1000 and the Russell Small Cap Comp Value Index.

See our latest analysis for Solstice Advanced Materials.

That back and forth in the indices comes as Solstice Advanced Materials trades around $50.14, with a 30 day share price return of 12.83 percent, which signals strengthening momentum rather than a long term breakout at this stage.

If index reshuffles have you thinking more broadly about opportunities in materials and beyond, this could be a good moment to explore fast growing stocks with high insider ownership.

With shares trading about 17 percent below analyst targets and an implied intrinsic discount above 50 percent, is Solstice Advanced Materials still flying under Wall Street’s radar, or is the market already baking in its next leg of growth?

Price-to-Earnings of 24.2x, Is it justified?

On a price-to-earnings basis, Solstice Advanced Materials looks richly valued at a 24.2x multiple compared to peers, despite the recent share price momentum.

The price-to-earnings ratio compares the company’s current share price to its earnings per share. It gives investors a snapshot of how much they are paying for each dollar of current profits. For specialty chemicals and advanced materials businesses like Solstice Advanced Materials, this measure is often used as a quick gauge of how the market is pricing their earnings power and future growth.

Here, the 24.2x price-to-earnings looks demanding when set against the peer group average of 16.6x. This suggests investors are already paying a premium relative to similar companies. When framed against the broader US Chemicals industry average of 23.9x, that premium is far slimmer. This indicates the stock is broadly in line with sector pricing rather than a clear bargain.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 24.2x (OVERVALUED)

However, near term earnings hiccups or a setback in adoption of its low global warming refrigerants could quickly challenge today’s optimistic growth expectations.

Find out about the key risks to this Solstice Advanced Materials narrative.

Another View: Our DCF Lens

While the earnings multiple paints Solstice Advanced Materials as expensive, our DCF model sees a very different picture, with the shares trading about 53.6 percent below an estimated fair value of roughly $108. That gap hints at either a mispriced opportunity or overly hopeful cash flow assumptions; which do you think it is?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Solstice Advanced Materials for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 898 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Solstice Advanced Materials Narrative

If this perspective does not quite match your view, or you want to analyze the numbers yourself, you can build a personalized narrative in just a few minutes: Do it your way.

A great starting point for your Solstice Advanced Materials research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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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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