FIGS, Inc. (FIGS): what the price assumes

In the published model solve dated 2026-Q2, anchored at $15.42, FIGS, Inc. (FIGS) is priced for today's economics sustained for ~16.5 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-26.

Generated: 2026-08-31 · Source: https://boothcheck.com/report/FIGS

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 8: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 12.8% cost of capital; growth searched up to the 25% self-funding ceiling.

How unusual the bet is: n/a

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.1%); the inversion above states its own rate.

Per-Model Detail (n=18)

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Revenue reaccelerated hard in the March quarter, rising from $124.9 million to $159.9 million in the three months ended March 31, 2026 representing 28.0% year-over-year growth, with the customer base up 12.2% from approximately 2.7 million at March 31, 2025 to approximately 3.0 million at March 31, 2026.
• Cash moved the other way in the same quarter: Cash flows from operating activities decreased from $9.2 million to $(3.2) million in the three months ended March 31, 2026, because growth in a clothing business is bought as inventory before it is sold.
• Voting control is not in public hands: Our Class B common stock has 20 votes per share and our Class A common stock has one vote per share, and every Class B share belongs to the two co-founders.

Bull Case

Take the case against this company seriously first, because for a long stretch it was the better argument. A healthcare-apparel label that grew up online looked like a pandemic phenomenon whose moment had passed. The filings back that reading: operating income was 34.0 million dollars in 2023 and then 2.3 million dollars in 2024. Revenue barely moved across that stretch. Anyone can sew a pocket onto a scrub top, and the market behaved as though someone eventually would.

Then the numbers stopped cooperating with the story. Operating income recovered to 38.1 million dollars in 2025, and the March 2026 quarter accelerated: net revenues rose from $124.9 million to $159.9 million in the three months ended March 31, 2026 representing 28.0% year-over-year growth, while the company Expanded our community of active customers by 12.2% from approximately 2.7 million at March 31, 2025 to approximately 3.0 million at March 31, 2026. Net income went from a small loss to 6.3 million dollars. Growth of that shape does not usually follow a fad.

The margin is what makes the reacceleration interesting rather than merely nice. Gross margin increased 0.1 percentage points from 67.6% to 67.7% in the three months ended March 31, 2026, and the company attributes the move to positive impact from price increases and ongoing efficiency efforts. Read that carefully. The company raised prices into a tariff environment, absorbed the tariff cost, kept two thirds of every sales dollar as gross profit, and still added customers at a double-digit rate. Sixty-eight cents of gross profit on a garment is not apparel economics. It is brand economics.

There is a structural reason it can hold. The 10-K describes competition in this category as running on product quality, innovation, style, price, brand image, distribution model, as well as customer experience and service, and the buyer here wears the product through twelve-hour shifts and replaces it on a schedule rather than a whim. Compare the pressure the same industry describes elsewhere: at GIII, the filing warns that the nature of our industry may result in lower prices for our products and decreased gross profit margins. This company did the opposite in the same quarter.

Nothing in the capital structure forces anyone's hand either. There are about 277 million dollars of cash and short-term investments, no funded borrowings whatever, and roughly 27.7 million dollars of privately held equity investments carried at cost. During the March quarter the company bought back 571,592 Class A shares for approximately 8.8 million dollars, with about 43.2 million dollars still authorised. A business that owes nobody anything gets to be wrong for a while without consequence.

Bear Case

Strip the price down to what it actually rests on and one assumption is left standing: that this rate of growth continues for a very long stretch. Very little else is holding it up. Both the asset-based methods and the earnings-power methods land far below the shares, the peer-multiple methods land below them too, and only the cash-flow methods reach them at all. That is a pure duration bet, and among comparable fast growers roughly 14% sustained this kind of pace for a decade. The fragile input is not the growth rate. It is the calendar.

The second-most fragile input is the one currently doing the heaviest lifting. The March quarter's gross margin improved by exactly one tenth of a percentage point, and the filing explains the composition: the gain came from positive impact from price increases and ongoing efficiency efforts, partially offset by tariffs. So the price increases did not expand the margin. They defended it against a cost the company does not control. Defending a margin with price works until the customer notices, and healthcare workers buying uniforms out of their own pockets are exactly the buyers who notice.

Cash is the third problem, and it is the one the income statement hides. Profit rose while cash generation went backwards: Cash flows from operating activities decreased from $9.2 million to $(3.2) million in the three months ended March 31, 2026 and Free cash flow decreased from $7.9 million to $(5.6) million in the three months ended March 31, 2026. Growth in a physical-goods business is financed by inventory bought months before it is sold, so the faster it runs the more working capital it swallows. Over the trailing year free cash flow was roughly 39 million dollars, and stock-based compensation consumed close to three quarters of it.

Dilution follows from the same fact. The company reports earnings across roughly 196.1 million diluted shares while about 167.0 million are actually outstanding across the two classes. Buying back 8.8 million dollars of stock in a quarter while issuing options and units at that scale is not a return of capital. It is maintenance, and the share count has crept up about 0.3% a year since early 2022 despite the repurchases.

Then there is who decides. Our Class B common stock has 20 votes per share and our Class A common stock has one vote per share, all of the Class B sits with the two co-founders, and the filing ties that structure directly to the approval of any change of control transaction. A public holder here owns the economics and none of the outcome. Meanwhile the category itself offers no shelter: at COLM, the disclosure reads that In each of our geographic markets, we face significant competition from global and regional branded apparel, footwear, accessories, and equipment companies. Grant the bull the balance sheet, which is genuinely unencumbered. If the growth slows, the downside is bounded by about 277 million dollars of cash and short-term investments plus roughly 27.7 million dollars of private holdings, and by nothing else at all.

Valuation

The valuation methods here do not converge on anything. They separate. The price stands about 319% above where the asset-based methods land. Against the earnings-power methods the gap is wider still, roughly 380%. Even the peer-multiple methods sit about 50% under the shares. Only the cash-flow methods reach the price, and they get there by projecting the recent revenue trajectory forward for years.

So the question this price poses is not what the current profit stream is worth. Every static reading answers that, and every one of them answers it well below the quote. The question is how long the current trajectory lasts, and that is a question no method can settle. What can be said is how often it has been settled favourably before: among comparable fast growers, only about 14% sustained a pace like this for a decade.

The underlying economics explain both the appeal and the distance. Filed operating income was 38.1 million dollars on 631.1 million dollars of revenue for 2025, about six cents on the sales dollar, and 4.5 million dollars on 159.9 million dollars of revenue in the March quarter. Gross profit in that quarter ran at just over two thirds of revenue. The distance between sixty-eight cents of gross profit and a handful of cents of operating profit is the entire business model in one line: almost everything the brand earns on the garment is spent finding the next person to sell one to. If that spending ever becomes optional, the operating margin has a great deal of room. If it never does, it does not.

The balance sheet bounds the downside without doing much else. There are about 277 million dollars of cash and short-term investments, no funded borrowings, and roughly 27.7 million dollars of privately held equity investments carried at cost, which stayed at exactly that value across the last five reported quarters. Against a company valued in the billions, that is a real floor rather than a large one. The share count has been broadly flat since early 2022, rising about 0.3% a year as repurchases and equity compensation cancel out.

Which leaves the composition of the growth itself as the thing to weigh. Scrubwear is 81% of revenue and everything else 19%, so the second category is where the expansion of the addressable market has to come from, and it is still small. A reader deciding what to do with this price is really deciding how much of the March quarter they believe repeats.

Catalysts

Second-quarter results are scheduled for August 6, 2026, with the date announced on July 16, 2026. The March quarter, reported May 7, 2026, set a demanding comparison: revenue of 159.9 million dollars at 28.0% year-over-year growth, about 3.0 million active customers, gross margin of 67.7%, and net income of 6.3 million dollars against a small loss a year earlier. The number that matters most in August is not the top line. It is whether cash generation follows the revenue, after operating cash flow turned negative in the March quarter.

Two dated items sit alongside the print. On May 7, 2026 the company announced a long-term partnership with the actor Noah Wyle focused on advocacy for the healthcare workforce and on medical debt. That is a marketing commitment, and its cost lands in the same expense line that separates a two-thirds gross margin from a single-digit operating margin. Separately, on May 12, 2026 a co-founder filed an amended beneficial-ownership report showing 27,668,112 shares, or 15.0% of the Class A stock, measured against 158,763,612 Class A shares outstanding as of April 30, 2026.

The open variable is trade policy. The company states that the March-quarter margin gain came from positive impact from price increases and ongoing efficiency efforts and was partially offset by tariffs, so the tariff cost is already inside the reported figure. What is not yet visible is whether another round of price increases can absorb the next change in trade terms without denting the customer growth the whole case depends on. The August call is the first place that question gets an answer.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• CRI (Carter's, Inc.)
• FY2025 10-K: …comfort and fit, quality, pricing, style, selection, convenience, and breadth of distribution. Both national brand and private label manufacturers, as well as specialty apparel brands and retailers, aggressively compete in the baby and young children's apparel market. Our primary competitors include (in alphabetical…
• FY2025 10-K: …recruiting costs, and other related costs. Amounts are reflected within Selling, general, and administrative expenses in our consolidated statement of operations. (4) Related to a non-cash impairment charge on the OshKosh indefinite-lived tradename asset in fiscal 2024. U.S. Retail U.S. Retail segment net sales…
• GIII (G III APPAREL GROUP LTD /DE/)
• FY2025 10-K: …nature of our industry may result in lower prices for our products and decreased gross profit margins. ​ The apparel business is highly competitive. We have numerous competitors with respect to the sale of apparel, footwear and accessories, including digital websites, distributors that import products from abroad and…
• FY2025 10-K: …of the wholesale operations segment. ​ The Company allocates overhead to its business segments on various bases, which include units shipped, space utilization, inventory levels, and relative sales levels, among other factors. The method of allocation has been applied consistently on a year-to-year basis. ​ The total…
• COLM (COLUMBIA SPORTSWEAR COMPANY)
• FY2025 10-K: …("EMEA"), and Canada. The following tables disaggregate the Company's reportable segment Net sales by product category and channel, which the Company believes provides a meaningful depiction of how the nature, timing and uncertainty of Net sales are affected by economic factors: Year Ended December 31, 2025 (in…
• FY2025 10-K: , especially during periods of heightened economic uncertainty in our key markets. • Highly Competitive Markets. In each of our geographic markets, we face significant competition from global and regional branded apparel, footwear, accessories, and equipment companies. More recently this competition has extended to…
• BOOT (BOOT BARN HOLDINGS, INC.)
• FY2025 10-K: …in our industry, and we may be unable to compete effectively. The retail industry for western and work wear is highly fragmented and characterized by primarily regional competitors. We estimate that there are thousands of independent specialty stores scattered across the country. We believe that we compete primarily…
• FY2025 10-K: …new stores. As a percentage of net sales, gross profit rate increased by 70 basis points driven primarily by a 130 basis-point increase in merchandise margin rate partially offset by 60 basis points of deleverage in buying, occupancy and distribution center costs. The increase in merchandise margin rate was primarily…
• BKE (BUCKLE, INC)
• FY2025 10-K: …industries are highly competitive with fashion, selection, quality, price, location, store environment, and service being the principal competitive factors. While the Company believes it is able to compete favorably with other merchandisers, including department stores and specialty retailers, with respect to each of…
• FY2025 10-K: …retail industry is highly competitive. The Company competes primarily on the basis of fashion, selection, quality, price, location, service, and store environment. The Company faces a variety of competitive challenges, including: • Anticipating and responding timely to changing customer demands and preferences; •…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.