If you are wondering whether Interface is still good value after its huge run, or if you have missed the boat, this article will walk you through what the numbers are actually saying about the stock.
Even after a small pullback of 2.3% over the last week, Interface is up 4.2% over 30 days, 16.6% year to date, 14.1% over 1 year, and an eye-catching 187.1% and 190.6% over 3 and 5 years respectively.
Those gains have come as investors have increasingly focused on Interface’s exposure to sustainable building trends and its position in commercial interiors, with the market reacting to updates around its strategy, balance sheet, and industry conditions. Broader optimism toward companies tied to green design and renovation cycles has also helped re-rate names like Interface, pulling more attention to whether the current price fairly reflects long term prospects.
Right now, Interface scores a 6/6 valuation check score, suggesting it screens as undervalued across all our basic tests. However, the real story lies in how different valuation methods stack up and in an even better way of thinking about fair value that we will get to by the end of this article.
A Discounted Cash Flow model estimates what a business is worth today by projecting the cash it can generate in the future and discounting those amounts back to a present value. For Interface, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections.
Interface is currently generating around $125.2 Million in Free Cash Flow, with Simply Wall St extrapolating modest growth each year. By 2035, Free Cash Flow is projected to reach about $182.2 Million, with intermediate years steadily rising from roughly $131.5 Million in 2026 to $176.3 Million in 2034, all in dollars and then discounted back to today.
Adding up these discounted cash flows, plus a terminal value, yields an estimated intrinsic value of about $57.24 per share. Compared with the current share price, this implies the stock is around 51.2% undervalued according to this DCF framework.
For a profitable company like Interface, the price to earnings ratio is a useful way to judge value because it connects what investors pay for each share directly to the earnings that business is producing today. In general, companies with stronger growth prospects and lower perceived risk can justify a higher, or more expensive, PE ratio, while slower growing or riskier businesses usually trade on lower multiples.
Interface currently trades on a PE of about 14.4x. That sits below both the Commercial Services industry average of roughly 22.9x and the peer group average of around 16.8x, which suggests the market is applying a discount to the stock. However, Simply Wall St also calculates a proprietary “Fair Ratio” of 18.9x, which estimates the PE Interface should trade on after factoring in its earnings growth outlook, profit margins, industry positioning, market cap and specific risks.
This Fair Ratio is more targeted than a simple peer or industry comparison because it adjusts for Interface’s unique mix of quality, growth and risk characteristics rather than assuming all companies deserve the same multiple. With the Fair Ratio of 18.9x sitting meaningfully above the current 14.4x, Interface still screens as undervalued on this earnings based lens.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, an easy tool on Simply Wall St’s Community page that lets you write the story behind your numbers. You can link your view of Interface’s business to a concrete forecast of revenue, earnings and margins, and turn that into a Fair Value you can compare with the current share price to inform your decisions. Each Narrative updates automatically as fresh news or earnings arrive. For example, one investor might build an Interface Narrative that assumes steady margin expansion, automation benefits and a Fair Value near 35 dollars per share. A more cautious investor could focus on competition, reliance on the U.S. market and office demand risks to arrive at a lower Fair Value closer to 30 dollars. Both investors would be using the same framework, but with different stories and assumptions.
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.
