Evaluating MS&AD Insurance Group Holdings (TSE:8725) After New Buyback, Dividend Hikes and Upgraded Guidance

MS&AD Insurance Group Holdings (TSE:8725) just rolled out a sizeable capital return package, combining a new share repurchase plan, higher ordinary and special dividends, and upgraded earnings guidance for the current fiscal year.

See our latest analysis for MS&AD Insurance Group Holdings.

The market seems to be warming to that message, with a 1 month share price return of 10.51 percent helping lift the stock to ¥3,521. A huge 5 year total shareholder return of 323.49 percent underlines how long term holders have already been well rewarded and suggests that momentum in investor confidence is still very much intact.

If this kind of capital return story has your attention, it could be a good moment to see what insurers' peers are doing and explore fast growing stocks with high insider ownership.

Yet with the stock already up strongly and trading below, but not far from, analyst targets, the key question now is whether MS&AD is still mispriced or if the market is already factoring in its future growth.

Price-to-Earnings of 7.2x: Is it justified?

Based on a price-to-earnings ratio of 7.2 times, MS&AD Insurance Group Holdings appears undervalued at ¥3,521 compared with both peers and the wider Asian insurance industry.

The price-to-earnings multiple compares the current share price to per share earnings, making it a core yardstick for mature, profit-generating insurers where earnings quality matters.

In this case, the market is paying a materially lower multiple for MS&AD than for similar companies, which suggests investors may be underpricing its earnings power despite its high-quality track record.

Relative to the Asian insurance industry average of 10.8 times earnings and an estimated fair multiple of 11.7 times, the current 7.2 times ratio indicates a steep discount that could narrow if sentiment or profitability improve.

Explore the SWS fair ratio for MS&AD Insurance Group Holdings

Result: Price-to-Earnings of 7.2x (UNDERVALUED)

However, softening earnings momentum and the possibility of weaker premium growth could challenge the undervaluation case if profitability does not reaccelerate.

Find out about the key risks to this MS&AD Insurance Group Holdings narrative.

Another View on Value

While the 7.2 times earnings multiple points to a clear discount versus peers, our DCF model goes even further. It suggests MS&AD's fair value sits far above the current ¥3,521 price, which implies the shares are deeply undervalued if those long term cash flow assumptions hold.

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 MS&AD Insurance Group 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 933 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 MS&AD Insurance Group Holdings Narrative

If you want to stress test these assumptions or rely on your own analysis, you can quickly build a fully personalised view in minutes: Do it your way.

A great starting point for your MS&AD Insurance Group Holdings research is our analysis highlighting 3 key rewards and 1 important warning sign 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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