Does the Recent 28.3% Drop Mean Opportunity in Eagle Materials for 2025?

• Wondering if Eagle Materials might be a bargain hiding in plain sight? You are not alone. Plenty of investors are trying to figure out if now is the right time to take a closer look at this construction materials company.
• The stock has had a volatile year, with a -28.3% return over the past 12 months and negative momentum across shorter time frames such as -11.9% in 7 days and -12.3% for the last 30 days. However, if you zoom out, Eagle Materials has delivered long-term gains of 68.9% over 3 years and 141.0% in 5 years.
• Much of the recent price change can be linked to shifts in industry sentiment and macroeconomic developments, including interest rate discussions and evolving construction demand. Investors are also reacting to news around infrastructure spending and raw material costs, which have heightened both optimism and uncertainty in the sector.
• When we run Eagle Materials through our valuation lens, it scores a confident 5 out of 6 on our value checks. We will break down what that means using traditional valuation approaches in just a moment. The real insight lies in the method we will reveal at the end of this article.

Find out why Eagle Materials's -28.3% return over the last year is lagging behind its peers.

Approach 1: Eagle Materials Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s value by projecting its future cash flows and discounting them back to their present value. This approach helps gauge what Eagle Materials’ shares should be worth today based on its ability to generate cash in the years ahead.

Eagle Materials has recently generated $331.2 million in Free Cash Flow (FCF), and analyst forecasts suggest continued growth. In five years, FCF is expected to reach roughly $510 million. Projections extrapolated by Simply Wall St estimate that by 2035, annual FCF could top $1.08 billion. These projections form the basis for the 2 Stage Free Cash Flow to Equity model used here.

According to the DCF analysis, the estimated intrinsic value for Eagle Materials is $459.61 per share. This represents a 55.2% discount to the current trading price, indicating the shares may be significantly undervalued by the market.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Eagle Materials is undervalued by 55.2%. Track this in your watchlist or portfolio, or discover 841 more undervalued stocks based on cash flows.

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

Approach 2: Eagle Materials Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used valuation tool, particularly relevant for profitable companies like Eagle Materials. It helps investors assess whether a stock's price reflects its current and future earnings power. For businesses generating strong and predictable profits, the PE ratio offers a straightforward lens through which to compare value across the sector.

The interpretation of the "normal" or fair PE ratio depends on growth expectations and risk. A higher growth outlook or lower risk profile typically justifies a higher PE multiple, since investors are more willing to pay up for future earnings. Conversely, uncertainty or below-average prospects tend to push PE ratios downward.

Eagle Materials currently trades at a PE ratio of 14.77x. In comparison, the Basic Materials industry averages about 15.25x, while similar peers come in higher at 24.84x. Simply Wall St’s "Fair Ratio," calculated at 17.68x, reflects a tailored benchmark that considers Eagle Materials’ specific earnings growth, profit margins, industry position, size, and risk factors. This figure goes a step beyond basic peer or industry comparisons by accounting for what truly drives the company’s long-term value and risk-reward profile.

Given its actual PE is 14.77x versus a Fair Ratio of 17.68x, Eagle Materials appears to be undervalued on this basis.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1412 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Eagle Materials Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your unique story about a company, where you connect the dots between what you think will drive Eagle Materials’ future and a specific set of numbers, like fair value, forecasted revenues, earnings, and profit margins. Instead of viewing the company through a one-size-fits-all lens, Narratives let you apply your own perspective to its financial forecasts and expected outcomes, creating a dynamic picture that matches your beliefs and assumptions.

On Simply Wall St’s Community page, you can easily create or follow Narratives, a tool used by millions of investors, and see how your view stacks up against others in real time. Narratives help you decide when a stock is undervalued or overvalued by comparing your own Fair Value to the latest share price, and they update automatically as news and results change the numbers. For example, at the bullish end, some investors see Eagle Materials fairly valued at $280 per share, factoring in strong margin expansion and infrastructure spend, while the most cautious project just $220, reflecting concerns about construction demand and regional risk.

Do you think there's more to the story for Eagle Materials? Head over to our Community to see what others are saying!

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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