MP Materials (NYSE:MP) stock appears very unappealing – making it a poor choice to purchase at its present price of approximately $27. We have identified several issues with MP stock, which contribute to its unattractiveness, especially considering its current valuation seems exceedingly high.
We reach our conclusion by evaluating the present valuation of MP stock against its operational performance in recent years, as well as its current and historical financial situation. Our assessment of MP Materials based on essential parameters such as Growth, Profitability, Financial Stability, and Downturn Resilience indicates that the firm shows a weak operating performance and financial state, as elaborated below. However, for those looking for potential growth with less volatility than individual stocks, the Trefis High Quality portfolio offers an alternative – having surpassed the S&P 500 and produced returns greater than 91% since its inception.
How Does MP Materials’ Valuation Compare to The S&P 500?
Based on the price you pay per dollar of sales or profit, MP stock appears very costly in relation to the broader market.
• MP Materials has a price-to-sales (P/S) ratio of 20.9 compared to a figure of 3.0 for the S&P 500.
How Have MP Materials’ Revenues Evolved in Recent Years?
MP Materials’ Revenues have increased slightly over the past few years.
• MP Materials has witnessed its top line contract at an average rate of 15.3% over the last 3 years (while the S&P 500 saw an increase of 5.5%)
• Its revenues have risen by 4.6% from $206 million to $216 million in the past 12 months (in comparison to a 5.5% increase for the S&P 500)
• Additionally, its quarterly revenues increased by 24.9% to $61 million in the latest quarter from $49 million a year prior (compared to a 4.8% improvement for the S&P 500)
What is the Profitability of MP Materials?
MP Materials’ profit margins are significantly lower than most companies within the Trefis coverage universe.
• MP Materials’ Operating Income over the last four quarters was $-166 million, reflecting a very poor Operating Margin of -77.0% (compared to 13.2% for the S&P 500)
• MP Materials’ Operating Cash Flow (OCF) for this timeframe was $-8.7 million, indicating a very poor OCF Margin of -4.0% (against 14.9% for the S&P 500)
• For the last four-quarter duration, MP Materials’ Net Income was $-105 million – revealing a very poor Net Income Margin of -48.4% (as opposed to 11.6% for the S&P 500)
Is MP Materials Financially Stable?
MP Materials’ balance sheet exhibits strength.
• MP Materials’ Debt was $916 million at the conclusion of the latest quarter, while its market capitalization stands at $4.5 billion (as of 6/10/2025). This results in a moderate Debt-to-Equity Ratio of 20.3%(versus 19.9% for the S&P 500). [Note: A lower Debt-to-Equity Ratio is preferred]
• Cash (and cash equivalents) comprises $759 million of the $2.4 billion in Total Assets for MP Materials. This results in a very robust Cash-to-Assets Ratio of 32.1% (compared to 13.8% for the S&P 500)
How Resilient is MP Stock During a Downturn?
MP stock has underperformed the benchmark S&P 500 index during several recent downturns. While investors remain hopeful for a soft landing in the U.S. economy, how severe could the situation become if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks performed during and after the last six market crashes.
Inflation Shock (2022)
• MP stock dropped 50.2% from a high of $49.44 on 2 March 2021 to $24.61 on 13 May 2021, compared to a peak-to-trough decrease of 25.4% for the S&P 500
• The stock completely recovered to its pre-Crisis peak by 4 January 2022
• Since then, the stock has risen to a high of $58.26 on 4 April 2022 and currently trades at approximately $27
Covid Pandemic (2020)
• MP stock declined 50.2% from a high of $49.44 on 2 March 2021 to $24.61 on 13 May 2021, while the S&P 500 saw a peak-to-trough drop of 33.9%
• The stock fully regained its pre-Crisis peak by 4 January 2022
Combining All The Factors: Implications for MP Stock
In conclusion, MP Materials’ performance across the criteria detailed above is summarized as follows:
• Growth: Neutral
• Profitability: Extremely Weak
• Financial Stability: Very Strong
• Downturn Resilience: Very Weak
• Overall: Weak
However, considering its extremely high valuation, we conclude that the stock is very unappealing, which reinforces our stance that MP is currently a poor stock to purchase.
Although it would be wise to steer clear of MP stock for the time being, you might want to consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to generate strong investor returns. What is the reason? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks has provided a responsive strategy to take full advantage of favorable market conditions while minimizing losses during market downturns, as outlined in RV Portfolio performance metrics.
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