Does Aegon’s 19.7% Rally Reveal More Value After Streamlining Its Business in 2025?

• If you have ever wondered whether Aegon stock is trading below its true worth, you are not alone. Let's dig into where the value could really be hiding.
• Aegon's share price has impressed lately, climbing 6.7% over the last month and amassing a strong 19.7% gain year-to-date, topping that off with an impressive 21.2% return over the past year.
• Investors’ optimism seems to have been boosted by recent reports of Aegon successfully streamlining its business by focusing more on strategic core markets. Notably, the company's latest moves in portfolio rationalization and international partnerships have caught the market’s attention, suggesting management is pushing for long-term efficiency and growth.
• Currently, Aegon scores a value rating of 5 out of 6 based on our standard valuation checks, signaling that there could be solid undervaluation here. Next, we'll explore how that score is calculated, and later in the article, I'll show you how to dig even deeper.

Find out why Aegon's 21.2% return over the last year is lagging behind its peers.

Approach 1: Aegon Excess Returns Analysis

The Excess Returns model offers a straightforward way to assess value by considering how much profit a company generates above the minimum return required by its investors. In Aegon's case, the model puts strong emphasis on the relationship between equity, earnings, and the cost of maintaining shareholder capital.

Key figures from this model include:

• Book Value: €5.85 per share
• Stable EPS: €0.86 per share (Source: Weighted future Return on Equity estimates from 8 analysts.)
• Cost of Equity: €0.30 per share
• Excess Return: €0.56 per share
• Average Return on Equity: 14.99%
• Stable Book Value: €5.75 per share (Source: Weighted future Book Value estimates from 7 analysts.)

This approach calculates that Aegon delivers a solid return above the hurdle rate investors expect. This signals the company's ability to create lasting value over time. The computed intrinsic value from the Excess Returns model is significantly higher than the current market price, implying a 68.8% discount to fair value.

Based on this data, Aegon stock appears deeply undervalued at present levels compared to what the underlying business performance would suggest.

Result: UNDERVALUED

Our Excess Returns analysis suggests Aegon is undervalued by 68.8%. Track this in your watchlist or portfolio, or discover 920 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 Aegon.

Approach 2: Aegon Price vs Earnings

The Price-to-Earnings (PE) ratio is widely used for valuing profitable companies, as it provides a quick snapshot of how much investors are willing to pay today for a euro of future earnings. It is especially useful for firms like Aegon that have stable earnings and a clear profit trajectory, making comparisons straightforward across peers and the wider industry.

A company’s PE ratio reflects not just its current performance, but also the growth expectations and risk profile that investors associate with it. Higher growth prospects or lower perceived risks tend to justify higher PE ratios. Elevated risks or stagnant growth typically weigh the ratio down.

Currently, Aegon's PE ratio stands at 8.6x. This is well below the insurance industry average of 11.7x and lower than the peer group average of 11.5x, suggesting the market may be pricing Aegon’s stock with more caution than its competitors. To get beyond these surface comparisons, Simply Wall St calculates a proprietary “Fair Ratio” for Aegon, which in this case is 8.9x. This Fair Ratio is tailored to Aegon’s specific situation, factoring in not just industry norms but also the company’s earnings growth, profit margin, market capitalization, and unique risk profile.

Using the Fair Ratio is a significant step up from simply comparing against peers or industry averages, as it accounts for the full context of Aegon’s business and market dynamics. When comparing Aegon's current PE of 8.6x to the Fair Ratio of 8.9x, the stock’s valuation appears just about right, neither signaling a major discount nor an excessive premium against well-rounded expectations.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Aegon Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your personal story about a company’s future. It is a framework that connects your financial forecasts for revenue, earnings, and profit margins to a fair value that reflects what you really believe is possible. By explicitly linking a company’s story and prospects to numbers, Narratives turn your research and insights into a transparent estimate of value, offering a much more dynamic and personalized view than static models alone.

Narratives are easy to build and share right on the Simply Wall St platform, within the Community page. Millions of investors use them every day to compare their view of a company’s fair value against the current share price, helping answer the most important question: “Is it time to buy or sell?” Because Narratives are updated whenever new news, earnings, or company events are reported, your investment rationale always reflects the latest information.

For example, using Aegon, some investors in the Community believe the fair value is as high as €7.80 thanks to margin improvements and digital growth, while others see it as low as €5.40 given revenue pressures and restructuring risks. This highlights how Narratives capture the full spectrum of perspectives, instantly recalculated whenever the facts change.

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