Reassessing Great-West Lifeco (TSX:GWO)’s Valuation After Record Highs and Renewed Market Attention

Great-West Lifeco (TSX:GWO) has pushed to record highs on the TSX after breaking above a long watched trend line, as investors revisit its diversified mix of insurance, asset management, and retirement businesses across Canada, the United States, and Europe.

See our latest analysis for Great-West Lifeco.

The latest trading surge has pushed Great-West Lifeco’s share price to around $66.80, with a 42.31% year to date share price return and a 49.25% total shareholder return over one year. This suggests momentum is clearly building as investors reassess its risk profile.

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With the stock now at record highs and trading above most analyst targets, the key question becomes whether Great-West Lifeco’s strong fundamentals and growth prospects still leave upside on the table, or if the market has already priced in the next leg of expansion.

Most Popular Narrative Narrative: 5.9% Overvalued

With Great-West Lifeco closing at CA$66.80 against a narrative fair value of about CA$63.08, the implied premium puts its growth assumptions under the spotlight.

The analysts have a consensus price target of CA$55.0 for Great-West Lifeco based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$61.0, and the most bearish reporting a price target of just CA$45.0.

Read the complete narrative.

Curious why a steady revenue climb, only modest margin shifts and a richer future earnings multiple still leave room for debate on this fair value? Click through to see which specific growth and valuation levers carry the most weight in this narrative, and how small changes in those assumptions could dramatically alter the upside story.

Result: Fair Value of $63.08 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent fee pressure in retirement platforms and execution risk on major digital upgrades could quickly undermine the optimistic medium term earnings narrative.

Find out about the key risks to this Great-West Lifeco narrative.

Another Angle on Value

Our SWS DCF model paints a very different picture, suggesting Great-West Lifeco is trading at a steep discount to its calculated fair value. If the cash flow assumptions prove right, today’s price could be an opportunity rather than a warning sign. The question is: which story do you trust?

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 Great-West Lifeco 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 903 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Great-West Lifeco Narrative

If you see the story differently, or want to dig into the numbers yourself, you can build a custom view in just minutes: Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Great-West Lifeco.

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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.

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