FPH

We rate Five Point Holdings, LLC (FPH) as Avoid with a composite score of 35.7/100 at a current price of $5.55. 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 investment (42th percentile) and stability (39th percentile), which together account for the majority of the composite score. Offsetting weakness in value (29th percentile) and momentum (30th percentile) tempers our overall conviction. We assign a No Moat rating (18/100), Medium uncertainty, and Standard capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; valuation compression risk if growth disappoints. 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.

Five Point Holdings, LLC holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 35.7/100 places it at rank #4031 in our full 7,333-stock universe. At $914M in market capitalization, Five Point Holdings, LLC is a small-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -74% combined with momentum at the 30th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 47% (-29.5pp vs sector) narrow to operating margins of -68% (-84.8pp vs sector) and net margins of 265.2%, yielding a gross-to-net conversion rate of 564%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $5.55, Five Point Holdings, LLC is trading at a premium to fundamental value. Our value factor score of 29/100 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 2.9x (a 76% discount to the sector median of 11.9x), P/B of 0.2x, P/S of 7.7x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Medium uncertainty rating to Five Point Holdings, LLC. The stock presents a balanced risk profile: below-average price stability (39th percentile) and weak quality scores (30th percentile). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: below-average price stability (39th percentile); weak quality scores (30th 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 39th percentile and quality factor at the 30th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 47% 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 is favorable for long-term investors.

We rate Five Point Holdings, LLC's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 6.0%, and the balance sheet is managed within acceptable parameters (D/E: 37%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Five Point Holdings, LLC 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, Five Point Holdings, LLC receives a Avoid rating with a composite score of 35.7/100 (rank #4031 of 7,333). Our quantitative framework assigns a No Moat (18/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 34/100.

Our analysis does not support a constructive view on Five Point Holdings, LLC at this time. The combination of limited competitive advantages, medium uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.