Millrose Properties (MRP): Evaluating Valuation After Recent Share Price Dip

Millrose Properties (MRP) finished yesterday’s session at $31.23, booking a daily decline of 3.6%. Over the past month, shares have dropped nearly 10%, although the stock is still up more than 42% since January.

See our latest analysis for Millrose Properties.

Millrose Properties’ recent slip puts a pause on what’s otherwise been a strong upward run. While the 30-day share price return stands at -9.8%, the year-to-date rally of 42% shows long-term momentum is still very much in play, hinting at growth potential even with short-term pullbacks.

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With a recent dip splashed against strong long-term gains, is Millrose Properties still changing hands below its true value, or has the market already factored in all its expected growth from this point?

Price-to-Earnings of 107.9x: Is it justified?

Millrose Properties is trading with a price-to-earnings ratio of 107.9x, which places it well above both the sector average and its peers. With the stock closing at $31.23, the market is placing a hefty premium on its current and anticipated earnings profile.

The price-to-earnings (P/E) ratio measures how much investors are willing to pay for each dollar of earnings. This metric offers a snapshot of market expectations for future growth. For property companies like Millrose, the P/E helps gauge whether earnings momentum is being rewarded too generously compared to the rest of the industry.

Compared to the US Specialized REITs industry average P/E of just 28x and a peer average of 26.5x, Millrose Properties’ multiple is exceptionally high. Even when evaluated against the company’s estimated fair price-to-earnings ratio of 75.8x, the valuation appears stretched, suggesting that investors expect stellar growth to justify such a rich premium.

Explore the SWS fair ratio for Millrose Properties

Result: Price-to-Earnings of 107.9x (OVERVALUED)

However, persistent overvaluation or a sudden slowdown in earnings growth could quickly alter investor sentiment and cause the stock to lose its upward momentum.

Find out about the key risks to this Millrose Properties narrative.

Another View: Discounted Cash Flow Says Undervalued

While Millrose Properties looks expensive compared to P/E ratios from peers and the sector, our DCF model paints a much different picture. According to the SWS DCF model, the shares are currently trading a substantial 67% below their estimated fair value. Could the market be undervaluing Millrose’s growth potential, or is the DCF model too optimistic?

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 Millrose Properties 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 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 Millrose Properties Narrative

If you see the story differently or want to dig into the numbers on your own terms, you can shape your own insights in just a few minutes with Do it your way.

A great starting point for your Millrose Properties research is our analysis highlighting 4 key rewards and 2 important warning signs 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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