Is It Too Late to Consider UniCredit After Its 99% One Year Surge?

• If you are wondering whether UniCredit's huge run means you have already missed the boat, or if there is still value left on the table, you are asking exactly the right question.
• The stock has climbed 3.7% over the last week, 12.9% over the past month, 84.7% year to date and a massive 98.9% over the last year, on top of multi year gains of 541.4% over three years and 1086.1% over five years.
• These gains have come as UniCredit has been rewarded for aggressive capital returns, including substantial buybacks and rising shareholder distributions, which have reshaped how investors view the bank's long term prospects. At the same time, ongoing balance sheet strengthening and a more focused strategy in core European markets have helped shift the narrative from turnaround risk to sustained profitability.
• Even after that rally, UniCredit posts a valuation score of 4 out of 6, suggesting there may still be pockets of undervaluation, and in the rest of this article we will walk through the key valuation methods investors use, before finishing with a more nuanced way to think about what the stock is really worth.

UniCredit delivered 98.9% returns over the last year. See how this stacks up to the rest of the Banks industry.

Approach 1: UniCredit Excess Returns Analysis

The Excess Returns model looks at how much profit UniCredit can generate above the required return for its shareholders, then capitalizes those excess profits into an intrinsic value per share.

For UniCredit, the starting point is a Book Value of €44.81 per share and a Stable EPS of €7.81 per share, based on weighted future return on equity estimates from 10 analysts. With an Average Return on Equity of 16.55% and a Cost of Equity of €5.18 per share, the bank is expected to earn an Excess Return of €2.63 per share, indicating it can consistently generate value over and above its cost of capital.

The model assumes this performance is sustained over time, supported by a Stable Book Value of €47.19 per share, drawn from future book value estimates by 7 analysts. On this basis, the Excess Returns valuation implies an intrinsic value that is around 11.5% above the current share price, suggesting that the market is still not fully pricing in UniCredit's profitability and capital efficiency.

Result: UNDERVALUED

Our Excess Returns analysis suggests UniCredit is undervalued by 11.5%. Track this in your watchlist or portfolio, or discover 916 more undervalued stocks based on cash flows.

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

Approach 2: UniCredit Price vs Earnings

For a consistently profitable bank like UniCredit, the price to earnings ratio is a useful yardstick because it links what investors pay today directly to the earnings the business is already generating. In general, faster growing and lower risk companies tend to trade on a higher PE, while slower growth or riskier profiles tend to trade on a lower multiple.

UniCredit currently trades on a PE of 10.55x, slightly below both the European Banks sector average of around 10.84x and the broader peer group at 12.34x. Simply Wall St also calculates a Fair Ratio of 11.57x, which is the PE that could be considered reasonable given UniCredit’s earnings growth outlook, profitability, size, industry positioning and risk profile.

This Fair Ratio is more informative than a simple comparison with peers or the sector because it adjusts for UniCredit’s specific characteristics rather than assuming every bank should trade at the same multiple. Comparing the Fair Ratio of 11.57x with the actual 10.55x indicates that the shares trade at a modest discount to what might be viewed as normal for this business.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your UniCredit Narrative

Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St’s Community page you can use Narratives, which let you turn your view of UniCredit’s story into a simple, transparent forecast for revenue, earnings and margins. This flows through to a Fair Value you can compare to today’s price, updates automatically when new news or earnings arrive, and can differ meaningfully from other investors’ views. For example, one investor might build a bullish Narrative around digitalization, wealth expansion and successful Commerzbank and Alpha Bank integration that supports a Fair Value closer to around €80. A more cautious investor might emphasize demographic and geopolitical risks plus pressure on margins and capital returns, landing on a Fair Value nearer to €57. By comparing each Narrative’s Fair Value to the current share price, investors can then decide whether UniCredit looks like a buy, hold or sell based on the story they believe is most likely.

Do you think there's more to the story for UniCredit? 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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