FIGS, Inc. (FIGS) stock intrinsic value fair value estimate & owner earnings analysis

WHAT THE BUSINESS IS. FIGS designs and sells medical scrubs and related apparel (underscrubs, outerwear, footwear, compression socks, lab coats, loungewear) to nurses, doctors and other healthcare workers, almost entirely through its own website and app, plus a few Community Hub stores and a growing TEAMS channel that sells to hospital systems. Scrubs are a consumable uniform: they wear out and must be replaced, and FIGS' 17 core scrub styles in 10 core colors made up over 60% of 2025 revenue. It had about 2.9 million active customers at the end of 2025 (up 9.4%), revenue of $631 million (up 13.6%), and about 84% of sales in the United States. Nearly all products are made by contract manufacturers in Vietnam and Jordan. The company has no debt and held about $366 million of cash and short-term securities at June 30, 2026. The co-founders control the vote through Class B shares. HOW WE MEASURED EARNING POWER. We measure owner earnings: operating cash flow with working-capital swings removed, stock-based compensation charged as a real cost, and only maintenance-level capital spending deducted. On that basis FIGS earned about $44.9 million in 2020 (a pre-IPO pandemic boom year), -$12.1 million in 2021 (IPO-year stock awards of $81 million), $18.8 million in 2022, $1.1 million in 2023, -$7.1 million in 2024 and $32.4 million in 2025 ($0.18 per diluted share). Two things depressed 2023 and 2024 that the filings show have ended: the IPO-era option grants finished vesting (options vesting fell from $22.5 million of value in 2024 to $7.9 million in 2025, and stock pay fell from $42.7 million to $26.9 million, then $12.2 million in the first half of 2026), and a one-off fulfillment-center build lifted capital spending to $16-17 million a year versus $5-8 million otherwise. We therefore treat 2025 as the best description of the business as it is today, confirmed by the four quarters since. Because the company holds a large cash pile that we add separately, we strip the interest earned on that cash out of the earnings stream (about $4 million after tax in 2025) so it is not counted twice, leaving about $29 million of business cash flow for 2025. Reported 2026 first-half profit includes a one-time $16 million expected refund of tariffs after the Supreme Court struck down the IEEPA tariffs in February 2026; we exclude it from earning power and count it once as an asset (about $12 million after tax). Excluding it, first-half 2026 revenue rose about 28% and business cash flow was roughly $22 million versus about $5 million a year earlier. GROWTH. Owner earnings rose from negative in 2024 to $32 million in 2025, so the trailing growth rate is very high; our base case assumes far less. We credit only what is already reported: 2026 at roughly $46 million (the first half actually earned, plus a second half no better than the second half of 2025). We do not credit continued gains in customers, international expansion (rest-of-world sales grew from $62 million in 2023 to $104 million in 2025), new stores or margin improvement, because each depends on winning share from competitors or on things that have not yet happened. BASE CASE ($3.81 per share). After the in-hand 2026 year, business cash flow settles at about $40 million a year, lower than 2026 because the replacement 10% global tariff (and the stated intention to raise it to 15%) on goods made in Vietnam and Jordan will flow through cost of goods with a lag; management estimated, before the court ruling, that tariffs would cost about 4 points of gross margin in 2026 before mitigation. We hold that level for ten years, supported by a repeat-purchase customer base of 2.9 million, and then fade it to zero over the following ten years, because a branded apparel business has no contract or patent that guarantees its position beyond that. The business is worth about $379 million; it owes nothing, and adding about $326 million of cash and securities beyond an operating cushion of $40 million, the $12 million tariff refund and a $28 million minority investment carried at cost gives about $744 million, or $3.81 per diluted share on 195.6 million shares. BEAR CASE ($2.28). Tariffs rise to the announced 15% with little mitigation, and the 2026 sales surge gives way to a 2024-style stall, when revenue grew under 2% and owner earnings were negative. Business cash flow runs about $12 million a year for ten years and fades to zero over five more. The business is worth about $108 million; with no debt, net cash of about $326 million and the refund bring the total to about $445 million, or $2.28 per share; the minority investment is given no value. Most of the bear value is cash, so the key risk to it is the company spending that cash poorly, for example on buybacks at high prices ($45 million in 2024, $33 million in the first half of 2026). BULL CASE ($4.83). The 2026 level of about $46 million holds with no further tariff drag, as the first-half 2026 gross margin (about 67-68% before the refund, level with 2025) suggests is possible, and the brand keeps that earning power for twenty years before fading over ten. The business is worth about $580 million; adding cash, the refund and the investment gives about $945 million, or $4.83 per share. WHAT COULD MAKE THIS WRONG. On the upside, if FIGS keeps adding customers and international sales at recent rates for years, it would be worth more than our bull case, but that is share-winning growth we do not count in advance. On the downside, fashion or fit missteps, heavier discounting by competitors, or higher tariffs could return earnings to the near-zero levels of 2023-2024. Share dilution is also significant: diluted shares were 195.6 million in mid-2026 against 166.5 million basic, reflecting a large pool of options and restricted stock. We could not reconcile the full first-half 2026 cash-flow statement line by line from the data available, so the first-half 2026 earnings figure is our estimate built from reported net income, depreciation and capital spending. MARGIN-OF-SAFETY PRICE. More than half of the base value is cash and the business has no debt, but the operating business is a competitive, tariff-exposed consumer brand with a short and uneven profit record. The margin-of-safety price is about $2.30, near the bear case and roughly 40% below the base case.