FBYD

We rate Falcon's Beyond Global, Inc. (FBYD) as Avoid with a composite score of 27.6/100 at a current price of $4.97. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in momentum (34th percentile) and stability (33th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (19th percentile) and quality (21th percentile) tempers our overall conviction. We assign a No Moat rating (34/100), High uncertainty, and Standard capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Falcon's Beyond Global, Inc. holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 27.6/100 places it at rank #4662 in our full 7,333-stock universe. At $414M in market capitalization, Falcon's Beyond Global, Inc. is a small-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 125%, though momentum at the 34th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 100% (+40.4pp vs sector) narrow to operating margins of -158% (-162.0pp vs sector) and net margins of 538.5%, yielding a gross-to-net conversion rate of 539%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $4.97, Falcon's Beyond Global, Inc. is trading at a premium to fundamental value. Our value factor score of 28/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 4.5x (a 81% discount to the sector median of 23.7x), P/B of 10.3x, P/S of 19.7x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a High uncertainty rating to Falcon's Beyond Global, Inc.. Key risk factors include significant leverage (237% debt-to-equity), below-average price stability (33th percentile), weak quality scores (21th percentile). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (237% debt-to-equity); below-average price stability (33th percentile); weak quality scores (21th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 33th percentile and quality factor at the 21th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 100% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate Falcon's Beyond Global, Inc.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 231.4%, and the balance sheet is managed within acceptable parameters (D/E: 237%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Falcon's Beyond Global, Inc. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Falcon's Beyond Global, Inc. receives a Avoid rating with a composite score of 27.6/100 (rank #4662 of 7,333). Our quantitative framework assigns a No Moat (34/100, trend: stable), High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 27/100.

Our analysis does not support a constructive view on Falcon's Beyond Global, Inc. at this time. The combination of limited competitive advantages, high uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.