Clal Insurance (TASE:CLIS): Reassessing Valuation After FTSE All-World Index Inclusion

Clal Insurance Enterprises Holdings (TASE:CLIS) is capturing attention after being added to the FTSE All-World Index. This move can boost the company’s global profile and bring new inflows from institutional investors.

See our latest analysis for Clal Insurance Enterprises Holdings.

Clal Insurance’s inclusion in the FTSE All-World Index comes as the company’s steady 1-year total shareholder return of 1.9% underscores a period of muted overall momentum. However, such a milestone could elevate investor interest and shift sentiment in the months ahead.

If major index moves have you thinking about the bigger picture, now’s a smart time to broaden your search and uncover fast growing stocks with high insider ownership

With Clal Insurance's recent index inclusion and modest returns over the past year, investors now face the key question: is its potential already reflected in the current price, or does an overlooked buying opportunity remain?

Price-to-Earnings of 18.3x: Is it justified?

Clal Insurance Enterprises Holdings is trading at a price-to-earnings (P/E) ratio of 18.3x, which places it significantly above both the Asian Insurance industry average of 11.8x and its peer average of 12.8x. The last close was ₪169.7, reflecting a valuation premium in the market.

The price-to-earnings ratio measures how much investors are willing to pay for each shekel of a company’s earnings. For insurance providers, this metric helps investors gauge investor sentiment and expectations against company profitability relative to competitors in the sector.

A P/E ratio this high suggests the market is pricing in strong future earnings, perhaps expecting Clal Insurance to outperform industry peers. However, with negative earnings growth over the past year and profitability below sector averages, it is questionable whether this earnings multiple is warranted.

Compared to both the industry and peer averages, Clal Insurance’s higher P/E may not be justified given its recent performance and muted net margins. While investors might see growth potential ahead, current fundamentals do not support a valuation premium of this magnitude.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 18.3x (OVERVALUED)

However, muted earnings growth and below-average profitability could quickly undermine bullish expectations if market sentiment shifts or if economic conditions deteriorate.

Find out about the key risks to this Clal Insurance Enterprises Holdings narrative.

Another View: SWS DCF Model Signals Even Greater Overvaluation

While Clal Insurance trades at a premium multiple, our SWS DCF model presents an even starker picture. According to the DCF, shares are valued well above what the company’s expected future cash flows would support, suggesting the current price may be significantly overvalued.

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 Clal Insurance Enterprises Holdings 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 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 Clal Insurance Enterprises Holdings Narrative

If you take a different view or want to dive deeper into the numbers yourself, building your own narrative with your own research is quick and simple. You can do it in just a few minutes. Do it your way

A great starting point for your Clal Insurance Enterprises Holdings research is our analysis highlighting 2 important warning signs that could impact your investment decision.

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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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