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• Wondering if Revolve Group stock is a bargain or if there is more risk than reward? Let’s dig into what has been happening and what it might mean for value-focused investors.

• Shares have rebounded nearly 9.3% over the last month, but are still down 28.0% year-to-date and 33.0% over the past year. This signals both volatility and renewed investor interest.

• In recent weeks, headlines have highlighted shifting consumer spending trends and evolving online shopping habits. Both of these factors have contributed to the stock’s recent upswing. Expanding influencer partnerships and speculation over retail sector consolidation have also kept Revolve Group in the spotlight.

• If you are looking at valuation, the company currently scores 0 out of 6 on our valuation checklist. There is plenty to unpack about the methods behind that result. Stick around as we break down different valuation approaches and reveal an even better way to get the full picture at the end.

Revolve Group scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

A Discounted Cash Flow (DCF) model calculates a company’s intrinsic value by projecting its future cash flows and discounting them back to today’s value. This helps investors estimate what the business is truly worth right now, based on its expected ability to generate cash in the future.

For Revolve Group, current Free Cash Flow is $66.6 million. Analysts forecast Free Cash Flow to be $62.05 million by 2026, and Simply Wall St projects values out to 2035, primarily extrapolating from available data after 2029. Over the next decade, the company’s cash flows are expected to stay within a tight range, hovering just above $60 million annually.

Using this 2 Stage Free Cash Flow to Equity model, the estimated intrinsic share value comes to $14.70. Compared to the current market price, this suggests the stock is about 64.5 percent overvalued.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Revolve Group may be overvalued by 64.5%. Discover 914 undervalued stocks or create your own screener to find better value opportunities.

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

The Price-to-Earnings (PE) ratio is often the go-to valuation metric for companies that are consistently profitable, like Revolve Group. It offers a quick way to gauge how much investors are willing to pay for each dollar of earnings. This is especially useful for businesses with a steady track record of profitability.

Growth expectations and overall risk play big roles in what is considered a “fair” PE ratio. If a company is growing quickly or taking less risk to generate strong profits, investors generally accept a higher PE. In contrast, for slower-growing or riskier companies, the fair multiple is typically lower.

Currently, Revolve Group trades at a PE ratio of 31.07x. This is well above both the Specialty Retail industry average of 18.03x and the peer group average of 16.10x. At first glance, this suggests the stock trades at a significant premium to its sector.

However, Simply Wall St’s proprietary “Fair Ratio” for Revolve Group is 16.04x. The Fair Ratio is designed to be a more tailored benchmark than using generic industry or peer averages because it accounts for factors specific to Revolve Group, including its earnings growth, profit margins, risk profile, and market capitalization. This approach provides a more nuanced estimate of a reasonable valuation multiple rather than a one-size-fits-all comparison.

Comparing the Fair Ratio of 16.04x to Revolve Group’s current PE of 31.07x indicates that the stock is trading well above what would be considered reasonable based on its fundamentals.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1438 companies where insiders are betting big on explosive growth.

Earlier, we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your personal story about a company, where you connect your beliefs about Revolve Group’s future, such as revenue growth, margins, and earnings estimates, to a financial forecast and ultimately a fair value for the stock.

Unlike traditional models or static PE ratios, Narratives allow you to quickly and clearly outline your assumptions about the business, putting numbers behind the story and comparing your estimated fair value against the current price. This approach moves beyond the numbers, helping you see not only whether the price seems reasonable, but also if it aligns with your unique expectations.

Best of all, Narratives are easy to use and are part of Simply Wall St’s popular Community page, where millions of investors create, share, and update their views. They are dynamic and automatically refresh when new information, such as earnings or news, impacts the company, so your story always stays relevant.

For example, some investors see international expansion and AI-powered marketing lifting earnings and set a Fair Value above $30. Others focus on margin pressures and inventory risk, resulting in a value closer to $19. Narratives help you weigh these perspectives and decide if now is the right time for your own decision.

Do you think there’s more to the story for Revolve Group? 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.

Companies discussed in this article include RVLV.

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