Jim Cramer highlighted that Magnum Ice Cream's stock is trading at a notable discount compared to industry peers, suggesting potential upside for investors. The assessment comes amid broader market scrutiny of consumer discretionary valuations.
- Magnum Ice Cream trades at an 8.2x EV/EBITDA multiple, below sector average of 12.5x
- Year-over-year EBITDA growth of 9.1% outpaces sector average of 6.4%
- Stock return of 4.3% over 12 months lags behind sector’s 11.7% return
- Price-to-earnings ratio of 14.8x is below sector median of 19.3x
- Analyst sentiment is shifting, with multiple 'Buy' ratings initiated
- Valuation gap presents potential re-rating opportunity for investors
Jim Cramer noted that Magnum Ice Cream's equity is currently priced significantly lower than comparable frozen dessert companies, citing a valuation gap that reflects a possible market inefficiency. While specific peers were not named, the comparison centers on enterprise value-to-revenue multiples and trailing twelve-month earnings multiples, with Magnum trading at approximately 8.2x EV/EBITDA versus an average of 12.5x among similar publicly traded ice cream brands. The discrepancy is further underscored by revenue growth trends: Magnum reported a 9.1% year-over-year increase in adjusted EBITDA for the fiscal year ending September 2025, outpacing the sector average of 6.4%. Despite this stronger performance, its stock has underperformed, returning 4.3% over the past 12 months versus a sector average of 11.7%. Analysts tracking the consumer discretionary space are beginning to reassess the valuation, with several initiating coverage at 'Buy' ratings. The stock's price-to-earnings ratio of 14.8x is notably below the sector median of 19.3x, suggesting room for re-rating if growth momentum continues. Investors in the frozen dessert segment, including retail and institutional holders, may be adjusting their positions in anticipation of a potential valuation correction. The stock's relative discount could attract value-oriented funds seeking exposure to high-quality consumer brands with resilient demand.