Perimeter Solutions (PRM): Assessing Valuation After a Strong Year-to-Date Share Price Rally

Perimeter Solutions (PRM) has been quietly rewarding patient investors, with the stock up around 12% over the past month and more than doubling year to date. This performance is catching fresh attention across the fire safety space.

See our latest analysis for Perimeter Solutions.

With the share price now at $28.17, Perimeter’s strong year to date share price return and powerful three year total shareholder return suggest momentum is still building as investors reassess its long term growth and risk profile.

If Perimeter’s run has you rethinking what could rally next, this is a good moment to explore fast growing stocks with high insider ownership for more under the radar growth stories.

Yet with Perimeter still trading at a modest discount to analyst targets and only a slight intrinsic discount, investors now face a key question: is there meaningful upside left, or has the market already priced in future growth?

Price-to-Earnings of 53.4x: Is it justified?

Perimeter Solutions trades on a steep price-to-earnings ratio of 53.4 times at the last close of $28.17, significantly richer than peers and sector averages.

The price-to-earnings multiple compares today’s share price with the company’s earnings per share, making it a quick yardstick for how much investors are willing to pay for each dollar of profit. For a specialized chemicals and fire safety business like Perimeter, this ratio reflects expectations for durable profitability, cash generation, and future growth rather than short term revenue moves.

At 53.4 times earnings, the market is paying a premium price relative to both similar sized companies and the broader US market. This indicates that investors are already assuming stronger profitability and a sustained improvement in returns. Perimeter has only recently become profitable and currently shows a low 7 percent return on equity. The elevated multiple therefore appears to reflect confidence that the forecast increase in return on equity to around the low 20s will materialize and support the valuation.

Compared with the US Chemicals industry average price-to-earnings ratio of about 24 times and a peer group near 26.6 times, Perimeter’s valuation stands out as materially more expensive. The multiple is more than double the broader industry benchmark, highlighting how optimistic the market appears to be about the company’s earnings trajectory and competitive position.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 53.4x (OVERVALUED)

However, risks remain, including a potential slowdown in fire safety demand or project delays. Any stumble in achieving forecast returns could quickly compress the lofty valuation.

Find out about the key risks to this Perimeter Solutions narrative.

Another View: DCF Suggests Only Mild Upside

While the earnings multiple paints Perimeter as expensive, our DCF model takes a more measured stance. At $28.17, the shares trade around 5.2 percent below our $29.73 fair value estimate, implying only a small margin of undervaluation rather than a clear bargain.

That modest gap offers some cushion if growth slows, but it also limits upside if everything goes right. This leaves investors to decide whether a slim discount is enough compensation for execution and sector risks.

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 Perimeter Solutions 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 908 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 Perimeter Solutions Narrative

If you would rather dig into the numbers yourself and reach your own conclusions, you can build a personalized view of Perimeter in just a few minutes, Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Perimeter Solutions.

Ready for your next investing move?

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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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