Analyzing Talanx After Five Year 381% Rally and Strong 2025 Earnings Momentum

Thinking about what to do with Talanx stock? You’re not alone. Investors have been watching its remarkable journey with keen interest. Over the past five years, Talanx has handed shareholders a staggering 381.1% return, including a 60.8% gain in just the last year. Even in the past week and month, the stock continued to inch upward, rising 2.2% and 2.4% respectively. Such persistent strength hints at more than just market optimism, especially as insurance giants like Talanx navigate changing risk landscapes and shifting investor sentiment.

Riding this kind of momentum, it’s natural to ask: does the current share price at €113.5 still offer good value? Here’s where things get interesting. By checking the main valuation measures, Talanx scores a 3 out of 6. In other words, it’s undervalued in half of the metrics analysts typically consider. That’s a compelling sign for bargain hunters, but also a reason for more seasoned investors to dig deeper.

So how do these different valuation methods stack up, and what can they really tell us about Talanx’s future? Next, we’ll break down the approaches one by one. At the end, I’ll share an even more powerful way to spot value that most overlook.

Talanx delivered 60.8% returns over the last year. See how this stacks up to the rest of the Insurance industry.

Approach 1: Talanx Excess Returns Analysis

The Excess Returns valuation approach focuses on how effectively a company can generate profits above its cost of equity. In simple terms, it measures how much more value Talanx creates from its investments compared to what investors require as a minimum return. This method provides a clear perspective on how well a business uses its capital to fuel long-term growth.

For Talanx, the numbers speak loudly. The company reports a Book Value of €45.89 per share and a Stable Book Value projected at €57.45 per share, based on weighted future estimates from analysts. Its Stable Earnings Per Share are calculated at €9.96, with an average Return on Equity of 17.34%, which is comfortably above its Cost of Equity at €2.73 per share. This results in an Excess Return of €7.23 per share, highlighting Talanx’s strong ability to generate shareholder value above its cost.

Based on these figures, the Excess Returns model estimates Talanx’s intrinsic value at €272.05 per share. Compared to the current trading price of €113.5, this suggests the stock is roughly 58.3% undervalued. This represents a significant margin of safety and indicates strong upside potential according to this metric.

Result: UNDERVALUED

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

Our Excess Returns analysis suggests Talanx is undervalued by 58.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Talanx Price vs Earnings

For companies that are consistently profitable, the Price-to-Earnings (PE) ratio is often the best go-to valuation metric. It gives a quick sense of how much investors are paying for each euro of earnings, making it especially useful for steady earners like Talanx. Generally, a higher PE ratio suggests the market expects stronger future growth or sees lower risk, while a lower PE can point to limited growth prospects or higher uncertainty.

Looking at the numbers, Talanx currently trades on a PE ratio of 13x. That is a little below the peer group average of 14.7x, but above the broader insurance industry average of 12.3x. This positioning indicates that investors see Talanx as a high-quality operator within its sector, but not overpriced versus similar companies.

Simply Wall St’s proprietary Fair Ratio calculates what a “normal” PE should be for Talanx, adjusting for factors like growth, risk, profit margins, market cap, and industry norms. For Talanx, the Fair Ratio is estimated at 12.06x. This tailored benchmark goes beyond simple average comparisons, offering a more nuanced view by capturing what makes Talanx unique, such as its growth outlook and relative risks.

Comparing the Fair Ratio to the current PE of 13x tells us Talanx is trading slightly above its fair value, but the gap is relatively small. The difference is just under 1x, so the stock does not appear significantly mispriced on an earnings multiple basis.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Talanx Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative connects your unique perspective on a company, your reasoning and story, directly to a financial forecast and a fair value. Instead of just crunching numbers, Narratives empower you to weave together your outlook on Talanx’s future profits, margins, and growth, and bring them to life as an actionable scenario.

Simply Wall St makes this approach easy for everyone. On the Community page, you can quickly build or explore Narratives used by millions of investors worldwide. This tool lets you see how changes in major events, financial performance, or market news update the fair value dynamically, so you always have the most current picture when making buy or sell decisions.

With Narratives, investors can directly compare the fair value implied by their scenario to the current share price, making it much easier to act with conviction. For example, while one Talanx Narrative might forecast a price target of €138.0 based on optimistic assumptions about growth and margins, another could set a more cautious target of €76.0 by factoring in risks like integration challenges and currency effects. Narratives help you decide which story and valuation fits your view best.

Do you think there's more to the story for Talanx? Create your own Narrative to let the Community know!

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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