Is It Too Late To Consider Perimeter Solutions After Its 126.8% Surge In 2025?

• Wondering if Perimeter Solutions is still a smart buy after its big run up, or if the easy money has already been made? This article will unpack whether the current price really matches the underlying value.
• The stock has climbed 2.6% over the last week and 11.9% over the past month, but the real eye catcher is its 126.8% gain year to date and 123.3% return over the last year, on top of a 229.7% rise over three years.
• That surge has come as investors refocus on wildfire prevention and suppression infrastructure, with Perimeter Solutions positioned as a key supplier of fire retardant and related services across North America. At the same time, market chatter around climate related risks and resilient infrastructure spending has helped re rate companies that provide critical, recurring safety solutions, which likely feeds into the recent momentum.
• Despite the strong share price performance, Perimeter Solutions only scores 1 out of 6 on our undervaluation checks, suggesting the market might already be pricing in a lot of good news. Next, we will break down how different valuation approaches view the stock, and then finish with a more holistic way to think about whether the current price really makes sense.

Perimeter Solutions scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Perimeter Solutions Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business is worth by projecting the cash it can generate in the future and then discounting those cash flows back to today in dollar terms.

For Perimeter Solutions, the model starts with last twelve month free cash flow of about $191.9 million and applies a two stage Free Cash Flow to Equity approach. Near term cash flows are based on analyst-style estimates, while later years are extrapolated by Simply Wall St, resulting in projected free cash flow of roughly $260.5 million by 2035. Each of these future cash flows is discounted back to today to reflect risk and the time value of money.

Adding up those discounted cash flows produces an estimated intrinsic value of $29.81 per share. Compared with the current share price, this implies the stock is about 3.4% undervalued, which is a very small margin of safety and suggests the market is already close to the DCF estimate.

Result: ABOUT RIGHT

Perimeter Solutions is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

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

Approach 2: Perimeter Solutions Price vs Earnings

For profitable companies like Perimeter Solutions, the price to earnings ratio is a straightforward way to judge whether investors are paying a reasonable price for each dollar of current profits. In general, faster growing and lower risk businesses should justify a higher, or premium, PE ratio, while slower growth or higher risk companies tend to trade on lower multiples.

Perimeter Solutions currently trades on a PE of about 54.6x, which is more than double the Chemicals industry average of roughly 24.1x and also well above the peer group average of around 26.6x. That shows the market is already pricing in strong growth and resilience compared with most listed chemical names.

Simply Wall St also uses a proprietary Fair Ratio model, which estimates what a “normal” PE should be after factoring in the company’s earnings growth outlook, profitability, risk profile, industry positioning and market cap. This tailored approach is more informative than a simple industry or peer comparison because it adjusts for company specific strengths and weaknesses rather than assuming all businesses deserve the same multiple. In Perimeter’s case, the current PE sits meaningfully above its Fair Ratio, which indicates that the shares appear expensive on an earnings basis.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1446 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Perimeter Solutions Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple framework that connects the story you believe about a company with the numbers that sit behind its fair value. A Narrative is your own, reasoned perspective on how a business will grow, monetize, and manage its costs, translated into assumptions about future revenue, earnings, and profit margins, and then into a fair value estimate. On Simply Wall St’s Community page, used by millions of investors, Narratives make this process accessible by guiding you to link a company’s story to a financial forecast and a clear fair value, then comparing that fair value to today’s share price to decide whether to buy, hold, or sell. As new information like earnings releases, regulatory changes, or wildfire policy updates emerges, Narratives are dynamically refreshed so your view stays current. For Perimeter Solutions, one investor might build a Narrative that assumes aggressive contract wins and ongoing climate related tailwinds, while another assumes slower growth and more cyclical demand, leading to very different fair values and decisions.

Do you think there's more to the story for Perimeter Solutions? 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com