Is It Too Late To Consider UBS After Credit Suisse Integration And Recent Share Price Surge

• If you are wondering whether UBS Group still looks attractive after its recent strong performance, or whether you may be arriving late to the party, this breakdown can help you consider whether the current share price aligns with the underlying value.
• The stock has climbed 8.3% over the last week, 16.0% over the past month, and is now sitting on a 32.9% gain over the last year, with a 125.6% return over 3 years and 227.0% over 5 years reshaping expectations around its long term potential and risk profile.
• Recent headlines have focused on UBS cementing its position as a global wealth management powerhouse following its integration of Credit Suisse, as well as strategic moves to streamline operations and capital allocation, which investors often interpret as signs of improving efficiency and profitability. At the same time, market commentary has highlighted how tighter regulatory oversight and shifting interest rate expectations could change the risk reward balance for large European banks, helping to explain why sentiment around UBS shares has sharpened.
• Right now, UBS Group scores a 2 out of 6 on our valuation checks, which suggests that while the market has already priced in some of its strengths, there may still be pockets of mispricing that different valuation models could reveal. Later on, we will explore a more detailed way to think about UBS's worth beyond the usual metrics.

UBS Group scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: UBS Group Excess Returns Analysis

The Excess Returns model asks whether UBS is generating enough profit on its equity base to justify its current valuation, after charging shareholders a fair cost for their capital. It focuses on how efficiently UBS turns book value into earnings and how sustainably that can grow.

For UBS, the starting point is a Book Value of CHF28.63 per share and a Stable EPS of CHF3.64 per share, based on weighted future return on equity estimates from 10 analysts. Against a Cost of Equity of CHF2.98 per share, this implies an Excess Return of CHF0.66 per share, supported by an average return on equity of 10.88%. Looking ahead, the Stable Book Value is projected to rise to CHF33.48 per share, based on estimates from 8 analysts.

Combining these inputs, the Excess Returns valuation points to an intrinsic value of about CHF32.83 per share. With the model indicating the stock is roughly 9.1% above this level, UBS Group screens as slightly overvalued on this framework rather than a clear bargain.

Result: ABOUT RIGHT

UBS Group is fairly valued according to our Excess Returns, but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for UBS Group.

Approach 2: UBS Group Price vs Earnings

For a consistently profitable bank like UBS, the price to earnings ratio is a practical way to assess valuation, as it directly links what investors pay to the profits the business is currently generating. In general, companies with stronger, more reliable growth and lower perceived risk can justify a higher PE multiple, while slower growth or higher risk usually warrants a lower one.

UBS currently trades on a PE of about 19.46x. That sits modestly above the broader Capital Markets industry average of around 18.31x, but slightly below the peer average of roughly 20.75x. This suggests the market is not paying an extreme premium versus comparable names. Simply Wall St’s proprietary Fair Ratio for UBS is 24.62x, which reflects the multiple the company might warrant given its specific earnings growth profile, industry positioning, profit margins, market cap and risk factors.

Because the Fair Ratio is tailored to UBS’s characteristics, it offers a more nuanced benchmark than simple comparisons to peers or sector averages. With the current PE of 19.46x sitting meaningfully below the Fair Ratio of 24.62x, UBS Group appears undervalued on a price to earnings basis.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your UBS Group Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives, a simple way to connect your view of UBS Group's story with a financial forecast and a fair value estimate. Narratives turn your assumptions about future revenue, earnings and margins into a living, dynamic model that updates as new news or earnings arrive. It is easy to access on Simply Wall St's Community page and can clearly highlight potential entry or exit points by comparing your Fair Value to today’s Price. This applies whether you lean bullish and see UBS compounding wealth management leadership, regulatory challenges and digital investments into something closer to CHF39.5 per share, or you are more cautious and think capital constraints, integration risks and margin pressure justify a value nearer CHF21.0. Each Narrative transparently ties those perspectives back to the numbers.

Do you think there's more to the story for UBS Group? Head over to our Community to see what others are saying!

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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