Migdal (TASE:MGDL): Valuation Insights Following FTSE All-World Index Addition

Migdal Insurance and Financial Holdings (TASE:MGDL) has just been added to the FTSE All-World Index. This move often prompts fresh investor attention as funds update their holdings to reflect the new inclusion.

See our latest analysis for Migdal Insurance and Financial Holdings.

Following its FTSE All-World Index inclusion, Migdal’s share price has seen little movement in recent weeks. Its 1-year total shareholder return of 1.26% shows modest long-term progress. This steady performance comes amid renewed investor awareness and shifting market momentum.

If you’re tracking how index changes might move other names, this is a perfect opportunity to expand your search and discover fast growing stocks with high insider ownership

With the recent index addition and only modest one-year returns, investors now face a classic dilemma: is Migdal undervalued and poised for a rerating, or has the market already priced in its future prospects?

Price-to-Earnings of 12.2x: Is it justified?

With a price-to-earnings (P/E) ratio of 12.2x, Migdal Insurance and Financial Holdings is trading below the Israeli market average of 15.3x, suggesting a more moderate valuation versus its local peers based on earnings.

The price-to-earnings ratio measures how much investors are willing to pay for each unit of earnings. It reflects expectations around a company's future profitability and growth relative to its sector. For an established insurer like Migdal, the P/E can signal whether the current price fairly values consistent earnings or discounts potential risks.

Compared to similar companies, Migdal's P/E ratio is not only below the Israeli market average, but also below the peer group average of 14.3x. This positions the stock as attractively valued by earnings. However, when compared with the wider Asian Insurance industry, Migdal's ratio is slightly higher than the 11.8x regional average, meaning it could be seen as more expensive in that broader context. No fair ratio estimate is available to indicate whether this multiple could move meaningfully in the future.

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

Result: Price-to-Earnings of 12.2x (UNDERVALUED)

However, subdued revenue and net income growth could limit Migdal’s ability to outperform. In addition, broader market shifts may weigh on valuation sentiment.

Find out about the key risks to this Migdal Insurance and Financial Holdings narrative.

Another View: Discounted Cash Flow Suggests Overvaluation

While Migdal Insurance and Financial Holdings appears undervalued based on its price-to-earnings ratio, our DCF model presents a different perspective. It estimates the fair value to be ₪9.2 per share, which is below the current price of ₪11.49. This points toward potential overvaluation. Which model should investors trust most?

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 Migdal Insurance and Financial 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 Migdal Insurance and Financial Holdings Narrative

If you see the story differently or have your own take, you can dive into the data and craft your perspective in under three minutes. Do it your way

A great starting point for your Migdal Insurance and Financial Holdings research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

Looking for More Investment Ideas?

Smart investors always look beyond the obvious to get ahead. Don’t limit yourself, take charge and seize fresh opportunities before the crowd catches on.

• Boost your portfolio with steady income by tapping into these 19 dividend stocks with yields > 3% and finding companies offering robust yields above 3%.
• Spot tomorrow’s tech giants by screening these 24 AI penny stocks poised to drive change in artificial intelligence and automation.
• Uncover value others might miss by targeting these 909 undervalued stocks based on cash flows that are trading below their intrinsic cash flow potential.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com