FIGS added to defensive indexes, drawing fresh attention to the stock

FIGS (FIGS) has been added to both the Russell 2000 Growth Defensive Index and the Russell 2000 Defensive Index, an event that often brings more attention from index-linked products and benchmark-focused investors.

This shift in index membership can matter for FIGS because many institutional portfolios track or reference Russell benchmarks, which can influence trading volumes, liquidity, and how the stock is compared with other small cap consumer companies.

FIGS has seen a mixed pattern recently, with the share price rising 3.74% in the last day and 2.19% over the past week, but down 11.31% over 30 days and 29.07% over 90 days. The 1 year total shareholder return of 75.86% and 3 year total shareholder return of 31.16% suggest earlier gains that contrast with more recent weak momentum at a share price of US$10.27.

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Given FIGS' sharp pullback over 30 and 90 days, yet strong 1 year and 3 year shareholder returns, the key issue now is whether the current valuation still skews the risk reward in favour of new buyers.

Most Popular Narrative: 28.6% Undervalued

At a share price of $10.27 versus a fair value of $14.39 in the most followed FIGS narrative, the gap between narrative and market is clear and worth unpacking.

The company, on an absolute basis, is still growing well. Further, it has several growth levers, such as expanding its product range, entering new markets, and leaning into its “TEAMS” offering.

According to julio, this fair value hinges on FIGS pressing those growth levers, while keeping its direct to consumer model and margin ambitions front and center.

Want to see what kind of product expansion, international rollout, and margin profile this valuation leans on? The narrative connects brand strength, data driven merchandising, and future earnings power in a very specific way.

Result: Fair Value of $14.39 (UNDERVALUED)

However, FIGS still faces execution risk around its margin targets and overseas expansion. FX swings and weaker demand could quickly challenge this undervalued narrative.

Another View on FIGS: Rich on Earnings Multiples

While the leading FIGS narrative sees the stock as 28.6% undervalued at a fair value of $14.39, the earnings multiple tells a more demanding story. FIGS trades on a P/E of 42.2x versus a fair ratio of 22.8x, the US Luxury industry at 21.6x, and peers at 21.3x. This points to a lot of optimism already in the price. If growth, margins, or sentiment slip, how comfortable are you with that kind of valuation gap?

To stress test that view against the earnings multiple, take a closer look at the valuation breakdown in the See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With FIGS presenting both optimism and tension in the recent narratives, it makes sense to move fast, review the details yourself, and weigh the 1 or more positives that investors are focused on. To see those potential bright spots laid out clearly, start with the 4 key rewards.

Looking for more investment ideas beyond FIGS?

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• Target potential mispricings by checking companies that score well on quality and valuation through the 44 high quality undervalued stocks.
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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.