Manchester United (NYSE:MANU): Assessing Valuation After Recent 15% Share Price Decline

Manchester United (MANU) shares have been tracking lower over the past month, slipping by 15%. While there have not been any recent headlines grabbing investor attention, the stock’s price movement suggests a change in market sentiment.

See our latest analysis for Manchester United.

Manchester United’s recent 15% slide comes after a choppy year for shareholders, who have seen a 1-year total shareholder return of -11.8%. Even longer-term investors have faced a 3-year total return of -27.2%. The fading momentum signals shifting sentiment around the club’s growth prospects and potential changes in risk perception, which is worth considering as investors look for value and direction.

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With shares trading well below analyst price targets, some may wonder whether the recent pullback has created an undervaluation or if the market has fully accounted for all future prospects. Is this a buying opportunity, or are expectations already priced in?

Price-to-Sales of 3x: Is it justified?

Manchester United shares trade at a price-to-sales ratio of 3x, sharply higher than the US Entertainment industry average of 1.3x. At the last close of $15.44, this premium places the stock well above peers in valuation terms, particularly for a business currently posting losses.

The price-to-sales multiple reflects the amount investors are willing to pay for each dollar of the company’s sales. In the entertainment sector, where revenue growth and brand strength drive valuation, this ratio helps compare Manchester United’s perceived growth potential to that of competitors.

Currently, the company’s valuation is not backed by consistent profitability. Its ratio also exceeds both the industry average and the estimated fair price-to-sales ratio of 2.1x. This suggests investors are betting on a turnaround or future growth that has not yet materialized. The market could recalibrate if these expectations are not met.

Manchester United’s premium multiple makes it appear expensive compared to industry norms and its own fair value. If the market re-evaluates its stance, there is potential for the multiple to compress toward a fairer level in line with sector benchmarks.

Explore the SWS fair ratio for Manchester United

Result: Price-to-Sales of 3x (OVERVALUED)

However, ongoing losses and a potential re-rating of the industry could quickly challenge the optimistic outlook for Manchester United’s shares.

Find out about the key risks to this Manchester United narrative.

Another View: DCF Sheds New Light on Value

Looking at Manchester United through the lens of our DCF model results in a very different conclusion. The SWS DCF model estimates fair value at $19.51, about 21% above the current share price, suggesting that shares may be trading at a discount. Does the market see deeper risks, or is this a rare opportunity?

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 Manchester United 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 926 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 Manchester United Narrative

If you believe the story is different, or want to dig deeper into the numbers yourself, you can craft your own perspective in just a few minutes. Do it your way

A great starting point for your Manchester United research is our analysis highlighting 2 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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