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Is MP Stock a Buy, Hold or Sell After Its 31.2% One-Year Decline?
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Key Takeaways
MP Materials fell 31.2% in a year as ongoing losses and execution risks weighed on its outlook.
MP's Q2 revenues surged 89%, while higher start-up and operating costs kept the company in the red.
MP is expanding rare earth and magnet capacity, but high costs and lower estimates cloud near-term prospects.
MP Materials (MP - Free Report) shares have fallen 31.2% in the past year, underperforming the industry’s 60.8% growth. The Zacks Basic Materials sector rose 12.7% while the S&P 500 gained 16.2% in the same timeframe. Rare earth peers USA Rare Earth, Inc. (USAR - Free Report) and Lynas Rare Earths Limited (LYSDY - Free Report) have declined 49.2% and 32.6%, respectively.
MP Materials currently trades at a forward 12-month price/sales multiple of 12.52X, significantly above the industry average of 1.65X. The stock carries a Value Score of F, indicating a stretched valuation. Meanwhile, USA Rare Earth and Lynas Rare Earths trade lower at 6.71X and 7.58X, respectively, as shown in the chart below.
Image Source: Zacks Investment Research
MP’s premium valuation is difficult to justify given its recent stock underperformance and continued operating losses. However, the company is transitioning toward higher-value separated rare earth products and domestic magnet production. Its production growth, expansion projects and improving revenue profile could support longer-term upside if execution remains on track.
MP Delivered Revenue Growth in Q2, Costs Hurt
MP generated second-quarter 2026 total revenues of $108.5 million, up 89% year over year. The company also recognized $17.6 million in income related to a price protection agreement (PPA) with the Department of War (DoW).
Materials segment revenues surged 155% to $95.6 million, driven by higher neodymium-praseodymium (NdPr) sales volumes and pricing. Magnetics segment revenues fell 17% to $16.5 million, as the start-up of magnet production and related pricing mechanisms weighed on results despite higher production of magnetic precursor products at the Independence facility.
Cost of sales climbed 43% due to higher sales volumes, while selling, general and administrative expenses rose 28% due to increased personnel costs. Start-up costs surged to $14 million from $0.76 million in the year-ago quarter due to the ramp-up of start-up activities for magnet production and chlor-alkali facilities, and costs associated with initial production of magnets at Independence.
Consequently, the company posted an operating loss of $32 million. However, it marked an improvement from the $43.9 million loss in the prior-year quarter. This was the 12th consecutive quarter of operating loss for the company, reflecting ongoing margin pressure as it continues transitioning toward higher-value separated rare earth products.
MP reported an adjusted loss of one cent per share in the second quarter of 2026, a significant improvement from the loss of 13 cents in the year-ago quarter.
MP Materials Ramps Up NdPr and Advances Magnet Production
NdPr production increased 41% year over year to 840 metric tons in the second quarter of 2026 despite a scheduled semiannual maintenance outage at Mountain Pass. Management expects third-quarter 2026 NdPr production to exceed 1,000 metric tons as throughput and plant reliability improve.
MP remains on track to begin producing terbium and dysprosium later this year, with first samarium production targeted for 2028. The company recently entered into a multiyear agreement to supply gadolinium oxide to a leading U.S. aerospace and defense manufacturer.
Meanwhile, MP Materials is progressing with its magnet manufacturing operations. During the second quarter, MP Materials delivered magnets to General Motors Company (GM - Free Report) for in-vehicle qualification testing and expects to begin commercial shipments in the fourth quarter, followed by a steady production ramp.
MP’s Earnings Estimates Trend Lower, Signal Near-Term Caution
The Zacks Consensus Estimate for MP Materials’ 2026 earnings stands at five cents per share against a loss of 24 cents in 2025. The 2027 earnings estimate is currently pegged at 81 cents per share, implying growth of 1,523%.
Image Source: Zacks Investment Research
However, the earnings outlook has weakened recently, with consensus estimates for both 2026 and 2027 revised downward over the past 90 days.
Image Source: Zacks Investment Research
Capacity Expansion Creates Long-Term Growth Potential for MP
MP is expanding operations at its Independence facility and has begun construction of the 10X magnetics facility. Commissioning activities for scaled heavy rare earth separation are also expected to begin soon at Mountain Pass. 10X will significantly expand MP’s fully integrated U.S. rare-earth magnetics manufacturing platform, which already encompasses mining and refining, metallization and alloying, sintering, finished magnet production and closed-loop recycling.
Once operational, the new campus is expected to contribute to the company’s total production capacity of approximately 10,000 metric tons of NdFeB rare-earth magnets per year, advancing the nation’s ability to produce these strategic components domestically.
MP Materials has also worked with U.S. and allied drone manufacturers to launch Project Swarm, an industrial coordination initiative designed to aggregate and standardize future magnet demand. It has already signed subscription agreements with several participants. The company’s partnership with Apple (AAPL - Free Report) on magnet recycling, magnet production and joint development also continues to advance.
High Costs and Execution Risks Cloud MP Materials’ Near-Term Outlook
Producing separated rare earth products and magnetic materials requires significantly higher costs than concentrate production due to additional processing requirements, chemical inputs, labor and maintenance. Cost of sales is thus expected to trend higher, reflecting increased sales of NdPr oxide and metal along with added costs associated with magnetic precursor products. Start-up costs are also likely to increase in the coming quarters.
Management expects near-term Magnetics results to be affected by the roll-off of precursor revenues, early magnet production scaling, customer testing milestones and continued investment in personnel and product development. Full-year 2026 capital expenditures are expected at $500-$600 million as 10X and other projects advance. These costs can keep profitability and free cash flow uneven until higher-value production reaches greater scale.
Execution also remains a key risk. MP is simultaneously commissioning its dysprosium and terbium circuit, progressing through customer qualification at Independence, preparing for commercial magnet shipments and constructing the 10X facility. Delays in commissioning, customer qualification, production yields or construction could push out anticipated revenue and cash-flow benefits.
Our Final Take on MP Stock
MP Materials has a compelling long-term growth story, supported by rising demand for domestically produced rare earth materials, an integrated business model and investments in U.S. magnet manufacturing. Successful execution of its expansion projects could strengthen its position in the domestic rare earth supply chain and improve its earnings profile over time.
MP continues to witness operating losses, elevated costs and substantial capital requirements, and decreased earnings estimates. The stock trades at a significant premium to both the industry and key rare earth peers despite underperforming the broader market and industry over the past year. Investors may want to remain on the sidelines until the company demonstrates more consistent earnings improvement and better execution of its expansion plans.
MP currently carries a Zacks Rank #5 (Strong Sell) and a VGM Score of F, pointing to an unfavorable near-term outlook.
View the Zacks #1 Rank List
Image: Shutterstock
Is MP Stock a Buy, Hold or Sell After Its 31.2% One-Year Decline?
Key Takeaways
MP Materials (MP - Free Report) shares have fallen 31.2% in the past year, underperforming the industry’s 60.8% growth. The Zacks Basic Materials sector rose 12.7% while the S&P 500 gained 16.2% in the same timeframe. Rare earth peers USA Rare Earth, Inc. (USAR - Free Report) and Lynas Rare Earths Limited (LYSDY - Free Report) have declined 49.2% and 32.6%, respectively.
MP’s 1-Year Price Performance vs. Industry, Sector, S&P 500 & Peers
Image Source: Zacks Investment Research
MP Materials Trading at a Premium
MP Materials currently trades at a forward 12-month price/sales multiple of 12.52X, significantly above the industry average of 1.65X. The stock carries a Value Score of F, indicating a stretched valuation. Meanwhile, USA Rare Earth and Lynas Rare Earths trade lower at 6.71X and 7.58X, respectively, as shown in the chart below.
Image Source: Zacks Investment Research
MP’s premium valuation is difficult to justify given its recent stock underperformance and continued operating losses. However, the company is transitioning toward higher-value separated rare earth products and domestic magnet production. Its production growth, expansion projects and improving revenue profile could support longer-term upside if execution remains on track.
MP Delivered Revenue Growth in Q2, Costs Hurt
MP generated second-quarter 2026 total revenues of $108.5 million, up 89% year over year. The company also recognized $17.6 million in income related to a price protection agreement (PPA) with the Department of War (DoW).
Materials segment revenues surged 155% to $95.6 million, driven by higher neodymium-praseodymium (NdPr) sales volumes and pricing. Magnetics segment revenues fell 17% to $16.5 million, as the start-up of magnet production and related pricing mechanisms weighed on results despite higher production of magnetic precursor products at the Independence facility.
Cost of sales climbed 43% due to higher sales volumes, while selling, general and administrative expenses rose 28% due to increased personnel costs. Start-up costs surged to $14 million from $0.76 million in the year-ago quarter due to the ramp-up of start-up activities for magnet production and chlor-alkali facilities, and costs associated with initial production of magnets at Independence.
Consequently, the company posted an operating loss of $32 million. However, it marked an improvement from the $43.9 million loss in the prior-year quarter. This was the 12th consecutive quarter of operating loss for the company, reflecting ongoing margin pressure as it continues transitioning toward higher-value separated rare earth products.
MP reported an adjusted loss of one cent per share in the second quarter of 2026, a significant improvement from the loss of 13 cents in the year-ago quarter.
MP Materials Ramps Up NdPr and Advances Magnet Production
NdPr production increased 41% year over year to 840 metric tons in the second quarter of 2026 despite a scheduled semiannual maintenance outage at Mountain Pass. Management expects third-quarter 2026 NdPr production to exceed 1,000 metric tons as throughput and plant reliability improve.
MP remains on track to begin producing terbium and dysprosium later this year, with first samarium production targeted for 2028. The company recently entered into a multiyear agreement to supply gadolinium oxide to a leading U.S. aerospace and defense manufacturer.
Meanwhile, MP Materials is progressing with its magnet manufacturing operations. During the second quarter, MP Materials delivered magnets to General Motors Company (GM - Free Report) for in-vehicle qualification testing and expects to begin commercial shipments in the fourth quarter, followed by a steady production ramp.
MP’s Earnings Estimates Trend Lower, Signal Near-Term Caution
The Zacks Consensus Estimate for MP Materials’ 2026 earnings stands at five cents per share against a loss of 24 cents in 2025. The 2027 earnings estimate is currently pegged at 81 cents per share, implying growth of 1,523%.
Image Source: Zacks Investment Research
However, the earnings outlook has weakened recently, with consensus estimates for both 2026 and 2027 revised downward over the past 90 days.
Image Source: Zacks Investment Research
Capacity Expansion Creates Long-Term Growth Potential for MP
MP is expanding operations at its Independence facility and has begun construction of the 10X magnetics facility. Commissioning activities for scaled heavy rare earth separation are also expected to begin soon at Mountain Pass. 10X will significantly expand MP’s fully integrated U.S. rare-earth magnetics manufacturing platform, which already encompasses mining and refining, metallization and alloying, sintering, finished magnet production and closed-loop recycling.
Once operational, the new campus is expected to contribute to the company’s total production capacity of approximately 10,000 metric tons of NdFeB rare-earth magnets per year, advancing the nation’s ability to produce these strategic components domestically.
MP Materials has also worked with U.S. and allied drone manufacturers to launch Project Swarm, an industrial coordination initiative designed to aggregate and standardize future magnet demand. It has already signed subscription agreements with several participants. The company’s partnership with Apple (AAPL - Free Report) on magnet recycling, magnet production and joint development also continues to advance.
High Costs and Execution Risks Cloud MP Materials’ Near-Term Outlook
Producing separated rare earth products and magnetic materials requires significantly higher costs than concentrate production due to additional processing requirements, chemical inputs, labor and maintenance. Cost of sales is thus expected to trend higher, reflecting increased sales of NdPr oxide and metal along with added costs associated with magnetic precursor products. Start-up costs are also likely to increase in the coming quarters.
Management expects near-term Magnetics results to be affected by the roll-off of precursor revenues, early magnet production scaling, customer testing milestones and continued investment in personnel and product development. Full-year 2026 capital expenditures are expected at $500-$600 million as 10X and other projects advance. These costs can keep profitability and free cash flow uneven until higher-value production reaches greater scale.
Execution also remains a key risk. MP is simultaneously commissioning its dysprosium and terbium circuit, progressing through customer qualification at Independence, preparing for commercial magnet shipments and constructing the 10X facility. Delays in commissioning, customer qualification, production yields or construction could push out anticipated revenue and cash-flow benefits.
Our Final Take on MP Stock
MP Materials has a compelling long-term growth story, supported by rising demand for domestically produced rare earth materials, an integrated business model and investments in U.S. magnet manufacturing. Successful execution of its expansion projects could strengthen its position in the domestic rare earth supply chain and improve its earnings profile over time.
MP continues to witness operating losses, elevated costs and substantial capital requirements, and decreased earnings estimates. The stock trades at a significant premium to both the industry and key rare earth peers despite underperforming the broader market and industry over the past year. Investors may want to remain on the sidelines until the company demonstrates more consistent earnings improvement and better execution of its expansion plans.
MP currently carries a Zacks Rank #5 (Strong Sell) and a VGM Score of F, pointing to an unfavorable near-term outlook.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.