Does Paramount Group Still Have Momentum After Its 31.7% Rally in 2025?

Trying to decide what to do with Paramount Group stock? You are not alone. After all, when a real estate investment trust posts a 31.7% gain year-to-date, and clocks in with a 34.9% return over the past year, it is only natural to wonder whether this name has more room to run or if it is time to take some chips off the table. That recent double-digit dip over the past month, down 13.5%, might also catch your eye, making it even trickier to gauge whether investors are simply taking profits or if risk perceptions have genuinely shifted. Despite short-term volatility, the three-year gain of 18.4% and a five-year breakeven suggest a stock that has seen both challenges and rebounds.

One way many investors try to cut through the noise is by looking closely at valuation. Paramount Group earns a solid valuation score of 3 out of 6, indicating that it is undervalued in half of the key areas analysts use to compare stocks in this sector. That does not make it a runaway bargain, but it does hint at compelling value if you dig beneath the surface. Spotting undervalued names is where long-term gains can truly be made. Let us break down the major valuation approaches for Paramount Group, with an eye out for an even deeper method of understanding its worth coming up at the end of the article.

Paramount Group delivered 34.9% returns over the last year. See how this stacks up to the rest of the Office REITs industry.

Approach 1: Paramount Group Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model aims to estimate a company's intrinsic value by projecting its future adjusted funds from operations and then discounting those expected cash flows back to their present value. This process helps investors determine what the business might truly be worth today, using realistic assumptions about the future.

Paramount Group's latest reported Free Cash Flow (FCF) stands at $178.82 million. Analyst estimates suggest that by 2027, FCF could reach $17.82 million. While analysts provide projections up to five years out, additional FCF estimates for the next decade are extrapolated to provide a longer-term perspective. For example, by 2035, forecasts suggest the FCF may settle at $3.96 million. All projections and calculations are done in US dollars.

According to this 2 Stage Free Cash Flow to Equity model, Paramount Group's estimated intrinsic value is $0.42 per share. Compared to the current market price, the DCF model implies the stock is approximately 1450.2% overvalued.

Result: OVERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Paramount Group may be overvalued by 1450.2%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Paramount Group Price vs Sales

The price-to-sales (P/S) ratio is a commonly used metric for evaluating real estate investment trusts like Paramount Group, especially when earnings may be volatile or negative. By focusing on the relationship between the market value and total revenues, the P/S ratio offers a more stable alternative to profit-based multiples. This makes it useful for companies where profits are less predictable but top-line revenue remains steady.

Growth expectations and risk play important roles in what investors consider a reasonable or “fair” P/S ratio. A higher ratio is typically justified when a company is expected to grow faster or has lower risk. Slower-growing or riskier companies usually trade at lower multiples. Comparing a company’s P/S to industry benchmarks provides context but does not always reflect its unique characteristics.

Currently, Paramount Group trades at a P/S ratio of 2.06x, compared to an industry average of 2.46x and a peer group average of 2.35x. The proprietary Simply Wall St Fair Ratio for Paramount Group sits at 2.35x, which takes into account not just industry norms but also specific company factors such as growth prospects, profit margins, market capitalization, and unique risks. This Fair Ratio provides a more tailored view of valuation than simple comparisons to peers or the broader industry.

Since Paramount Group’s current P/S ratio is only slightly below its Fair Ratio and the absolute difference is less than 0.10, this suggests that the stock is essentially priced in line with expectations given its characteristics.

Result: ABOUT RIGHT

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

Upgrade Your Decision Making: Choose your Paramount Group Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is simply the story you believe about a company, including the reasons, assumptions, and outlook that guide your investment decisions, connected to concrete financial forecasts like future revenue, profit margins, and a calculated fair value.

With Narratives, you are not just relying on broad ratios or analyst consensus but building your own picture of Paramount Group based on what you think will really happen and seeing how that story links directly to a fair value estimate. This hands-on approach is available right on Simply Wall St's platform, used by millions, within the Community page. This makes it easy for anyone to access and update their Narrative.

Narratives help you decide when to buy, hold, or sell by comparing your Fair Value against the current market Price, and they update automatically as news or earnings reports change the outlook. For example, one investor might see strong recovery ahead and set a high fair value, while another expects slower growth and calculates a much lower figure. That is the power of having your own Narrative to guide your decisions.

Do you think there's more to the story for Paramount Group? Create your own Narrative to let the Community know!

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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