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XPEL (XPEL) surprised the market with its first quarter 2026 earnings, reporting revenue of US$117.35 million and net income of US$10.35 million, above previously lowered expectations for modest growth.
See our latest analysis for XPEL.
The earnings beat comes after a mixed stretch for the stock, with a 1-day share price return of 0.99% contrasting with a 90-day share price return of negative 15.35%. At the same time, the 1-year total shareholder return of 16.85% points to momentum building over a longer horizon.
If this earnings surprise has you rethinking where growth could come from next, it may be worth scanning for other opportunities using our 19 top founder-led companies
With earnings and revenue ahead of expectations, a 1-year total return of 16.85% and a 90-day decline of 15.35%, plus a market cap of about US$1.2b, investors may be asking whether XPEL is undervalued today or already pricing in future growth.
Preferred P/E of 22.9x: Is it justified?
On a P/E of 22.9x, XPEL trades at a higher earnings multiple than both its peer group average of 19.6x and the broader US Auto Components industry at 19.9x. This points to a premium price tag at the recent $43.96 close.
The P/E ratio compares the share price to earnings per share, so a higher figure usually means the market is willing to pay more today for each dollar of current earnings. For a business with US$489.7m of revenue and US$53.0m of net income, that premium can reflect expectations that future earnings will be stronger than what is already on the income statement.
In XPEL's case, earnings are forecast to grow about 27% per year, which is faster than both the 16.4% forecast for the US market and the company's own 11.5% annual earnings growth over the past 5 years. Against that, revenue growth is expected to run at 11.1% per year, slightly slower than the 11.4% forecast for the US market, and current return on equity of 18.3% is described as low under the framework used here. The current 22.9x P/E is close to the estimated fair P/E of 23x, which suggests the premium may already align with where the market could rationally settle.
Compared with peers and the wider industry, the stock is not trading at a discount. It is more expensive on earnings than both the peer average P/E of 19.6x and the US Auto Components industry P/E of 19.9x. That leaves limited room for error if those higher growth and profitability expectations do not materialise as forecast.
Explore the SWS fair ratio for XPEL
Result: Price-to-Earnings of 22.9x (ABOUT RIGHT)
However, recent 90-day and multi year share price declines, alongside reliance on discretionary auto spending across many regions, could challenge the premium P/E story if sentiment weakens.
Find out about the key risks to this XPEL narrative.
Another View: DCF Points to Deeper Upside
While the current 22.9x P/E suggests XPEL is roughly in line with its fair ratio of 23x, the SWS DCF model presents a different view. At a share price of $43.96 versus an estimated future cash flow value of $129.90, the stock appears heavily undervalued, raising the question of which signal is more reliable.
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day ( check out XPEL for example ). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 51 high quality undervalued stocks . If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
Still unsure what to make of the mixed signals in this article? Consider taking prompt action: review the underlying drivers yourself and see why investors are focusing on 4 key rewards .
Looking for more investment ideas?
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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.
Companies discussed in this article include XPEL .
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