Is Ralph Lauren Still Attractive After Its 2025 Surge and Strong Five Year Rally?
- Wondering if Ralph Lauren at $356.97 is still worth buying after that huge run, or if you are turning up just as the party is ending? In this article we look at whether the current price really reflects the brand's long term strength.
- The stock has cooled slightly in the last week, down 3.8%, but that comes after a strong 15.4% gain over the past month and returns of 54.2% year to date and 55.2% over the last year, with a 279.4% gain over five years.
- Behind those moves, investors have been reacting to a mix of brand momentum, ongoing product refreshes across core lines, and strategic pushes into higher margin categories and new geographies. Together, these factors have supported the view that Ralph Lauren can maintain premium pricing and margin improvement even in a choppy consumer environment.
- Despite that optimism, Ralph Lauren only scores 1/6 on our valuation checks, which suggests the market may already be pricing in a lot of good news. Next we will walk through different valuation approaches and then finish by looking at a more nuanced way to judge whether the stock is truly good value.
Ralph Lauren scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Ralph Lauren Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model estimates what a business is worth today by projecting its future cash flows and then discounting them back to their present value.
For Ralph Lauren, the latest twelve month Free Cash Flow is about $800 million. Analysts and internal estimates see this growing steadily, with projections approaching roughly $1.4 billion by 2035 as the brand expands and margins improve. Simply Wall St uses a 2 Stage Free Cash Flow to Equity model, which blends the earlier analyst forecasts with longer term, extrapolated growth assumptions to build a 10 year cash flow path.
When these projected cash flows are discounted back to today, the model arrives at an intrinsic value of about $296.46 per share. Compared with the current share price of roughly $356.97, the DCF implies Ralph Lauren is around 20.4% overvalued on a cash flow basis.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Ralph Lauren may be overvalued by 20.4%. Discover 912 undervalued stocks or create your own screener to find better value opportunities.
Approach 2: Ralph Lauren Price vs Earnings
For profitable brands like Ralph Lauren, the Price to Earnings (PE) ratio is a useful yardstick because it tells you how much investors are paying today for each dollar of current earnings. What counts as a reasonable PE depends on how fast earnings are expected to grow and how risky those earnings are, with higher growth and lower risk usually justifying a higher multiple.
Ralph Lauren currently trades on a PE of about 25.3x, a premium to the broader Luxury industry average of roughly 21.0x but at a discount to a peer group sitting closer to 44.9x. To move beyond simple comparisons, Simply Wall St estimates a proprietary Fair Ratio of 19.9x for Ralph Lauren, based on its earnings growth outlook, profitability, industry, market cap, and risk profile. This tailored benchmark is more informative than a blunt industry or peer average because it adjusts for the company’s specific strengths and vulnerabilities instead of assuming all luxury names deserve the same multiple.
With the market multiple of 25.3x sitting meaningfully above the Fair Ratio of 19.9x, Ralph Lauren screens as overvalued on a PE basis.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Ralph Lauren Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Ralph Lauren’s future to a set of numbers and a Fair Value you can actually act on. A Narrative is your story about the company, expressed through assumptions about future revenue, earnings and margins, which the Simply Wall St platform (within the Community page used by millions of investors) then turns into a forecast and a Fair Value estimate. By comparing that Fair Value to today’s share price, Narratives help you connect your view with whether Ralph Lauren looks like a buy, a hold, or a sell. They also automatically update when new information like earnings, guidance, or news comes in, so your view never goes stale. For example, one investor might build a bullish Ralph Lauren Narrative that leans toward a higher Fair Value near $423.00. A more cautious investor could anchor their Narrative closer to $185.00, reflecting very different expectations from the same set of public facts.
Do you think there's more to the story for Ralph Lauren? 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.
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