FIGS, Inc. (FIGS) Stock Analysis
FIGS, Inc. (FIGS) Stock Analysis
Overall Grade: F (Concerning)
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FIGS, Inc. faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | 3.3% | Below expectations |
| FCF Margin | 3.8% | Cash flow pressure |
| Debt/Equity | 0.0x | Conservative leverage |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
What is FIGS, Inc.'s Profitability and ROIC?
FIGS, Inc.'s return on invested capital of 3.3% is below the typical cost of capital. Gross margin of 68.0% with operating margin at 4.9% reflects the company's strong market position.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 3.3% | Red flag | Below cost of capital |
| Return on Equity (ROE) | 4.5% | Warning | Moderate equity returns |
| Gross Margin | 68.0% | Excellent | Strong pricing power |
| Operating Margin | 4.9% | Warning | Moderate operational efficiency |
How Strong is FIGS, Inc.'s Cash Flow Quality?
FIGS, Inc. generated $22.0M in free cash flow over the trailing twelve months, representing a 3.8% margin. Cash earnings quality is strong, with operating cash flow exceeding net income by 1.7x.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 3.8% | Warning | Thin cash margins |
| Free Cash Flow (TTM) | $22.0M | Good | Positive cash generation |
| OCF/Net Income | 1.7x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is FIGS, Inc.'s Financial Health?
FIGS, Inc.'s debt-to-equity ratio of 0.0x indicates conservative leverage.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | 0.0x | Excellent | Conservative capital structure |
Is FIGS, Inc. Stock Overvalued or Undervalued?
FIGS, Inc. trades at a P/E of 60.8x, representing a premium to the sector median of N/A. Free cash flow yield of 2.0% reflects market expectations for growth.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | 60.8x | Warning | Premium valuation |
| EV/Sales | 1.1x | Excellent | Attractive revenue multiple |
| FCF Yield | 2.0% | Adequate | Lower cash yield |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 3.3% | Bottom 50% | 0.4x below |
| Free Cash Flow Margin | 3.8% | Bottom 50% | 0.7x below |
| Gross Margin | 68.0% | Top 5% | 2.0x above |
| Operating Margin | 4.9% | Bottom 50% | 0.6x below |
| Return on Equity (ROE) | 4.5% | Bottom 50% | 0.5x below |
| P/E Ratio | 60.8x | N/A | - |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: 3.3% (Red flag - Bottom 50% of sector (median: 8.0%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: 3.8% (Warning - Bottom 50% of sector (median: 5.4%))
Gross Margin
Revenue minus cost of goods sold as a percentage. Higher gross margins indicate pricing power and competitive advantage.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 50% | Strong pricing power and competitive moat |
| Good | 30% - 50% | Healthy margins, differentiated product |
| Adequate | 20% - 30% | Moderate margins, competitive industry |
| Warning | 10% - 20% | Thin margins, commodity-like business |
| Red flag | < 10% | Very thin margins, structural challenges |
Current: 68.0% (Excellent - Top 5% of sector (median: 33.4%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: 0.0% (Excellent)
P/E Ratio (Price-to-Earnings)
Stock price divided by earnings per share. Lower P/E may indicate undervaluation, while higher P/E suggests growth expectations.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 15x | Attractively valued, potential opportunity |
| Good | 15x - 25x | Fair value for quality company |
| Adequate | 25x - 35x | Growth premium, justify with earnings growth |
| Warning | 35x - 50x | High expectations priced in |
| Red flag | > 50x or negative | Speculative valuation or losses |
Current: 60.8x (Warning)
Free Cash Flow Yield
Free cash flow per share divided by stock price. Higher FCF yield indicates better cash return relative to valuation.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 8% | High cash return, potential value opportunity |
| Good | 5% - 8% | Solid cash yield |
| Adequate | 3% - 5% | Moderate cash return |
| Warning | 1% - 3% | Low cash yield, growth expectations |
| Red flag | < 1% | Minimal cash return to shareholders |
Current: 2.0% (Warning)
Frequently Asked Questions
Q: What is FIGS, Inc.'s Return on Invested Capital (ROIC)?
FIGS, Inc. (FIGS) has a trailing twelve-month Return on Invested Capital (ROIC) of 3.3%. This compares below the sector median of 8.0%. An ROIC below 8% suggests the company may be destroying shareholder value.
Q: What is FIGS, Inc.'s Free Cash Flow Margin?
FIGS, Inc. (FIGS) has a free cash flow margin of 3.8%, generating $22.0 million in free cash flow over the trailing twelve months. A thin FCF margin may indicate heavy reinvestment or operational challenges.
Q: Is FIGS, Inc. stock overvalued or undervalued?
FIGS, Inc. (FIGS) trades at a P/E ratio of 60.8x, which is above the sector median of N/A. The EV/Sales multiple is 1.1x. Free cash flow yield is 2.0%, reflecting growth expectations priced into the stock.
Q: What is FIGS, Inc.'s revenue and earnings growth?
FIGS, Inc. (FIGS) grew revenue by 5.9% year-over-year. Earnings per share increased by 83.3% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: Is FIGS, Inc. buying back stock?
FIGS, Inc. (FIGS) repurchased $40.9 million of stock over the trailing twelve months. This represents a buyback yield of 3.7%.
Q: How does FIGS, Inc. compare to competitors in Industrials?
Compared to other companies in Industrials, FIGS, Inc. (FIGS) shows: ROIC of 3.3% is below the sector median of 8.0% (Bottom 31%). FCF margin of 3.8% trails the sector median of 5.4% (Bottom 42% of sector). Gross margin at 68.0% is 34.6 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Industrials companies with available SEC filings.
Q: What warning signs should I watch for with FIGS, Inc.?
Investors in FIGS, Inc. (FIGS) should monitor these potential warning signs: 1) FCF margin is thin at 3.8%, leaving limited buffer for economic downturns. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-11-06. TTM metrics as of Q3 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.