Assessing eToro Group After 41% Slide and New European Expansion Announcements

If you’ve got eToro Group on your radar, you’re probably sizing up what’s next for the stock, especially after seeing some recent red on the chart. Whether you’re already invested or just debating a first move, there’s no shortage of headlines and price changes to sift through. Over the past week, the stock has dipped by 4.5%, and looking at the last month, it has dropped a further 10.8%. Zoom out to the start of the year, and eToro Group is sitting at a 41.3% decline. That might sound steep, but such moves sometimes shift how the market perceives risk and can open the door for potential opportunity if the fundamentals line up.

It’s also worth noting that eToro Group has a current valuation score of 2 out of 6, meaning it ticks two of the six boxes for being potentially undervalued according to standard checks. Not an overwhelming endorsement, but it’s definitely not the worst position for a company operating in a sector that frequently sees swings tied to broader market sentiment and investor appetite for risk.

So, what do these numbers really tell us about eToro Group’s worth? That’s where a closer look at the company’s valuation using a mix of well-respected methods really becomes valuable. If you stick around, you’ll find out not just how the standard approaches stack up but also discover an even deeper insight into what drives true value.

eToro Group scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: eToro Group Excess Returns Analysis

The Excess Returns valuation model focuses on how successfully a company generates returns above the actual cost of its equity. In other words, it measures how much profit eToro Group earns from invested capital beyond what shareholders expect as compensation for risk.

For eToro Group, the average return on equity over the past five years is a notable 22.56%. The company has a book value of $16.43 per share and a stable earnings per share (EPS) of $3.71, supported by consistent historical performance. With a cost of equity set at $1.67 per share, the resulting excess return is $2.03 per share. These figures suggest eToro Group has managed to grow value for shareholders above the hurdle rate, and its stable book value further supports the sustainability of these returns.

Considering these fundamentals, the Excess Returns model estimates an intrinsic value for eToro Group stock that indicates the share price is currently 12.7% undervalued. In practical terms, the stock trades below what these returns and book value would suggest it is worth.

Result: UNDERVALUED

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

Our Excess Returns analysis suggests eToro Group is undervalued by 12.7%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: eToro Group Price vs Earnings

For profitable companies like eToro Group, the Price-to-Earnings (PE) ratio is a well-established metric for assessing value. The PE ratio tells investors how much they are paying for each dollar of earnings, which is especially relevant when consistent profits are reported.

Growth expectations and business risk play a major role in what counts as a fair PE ratio. Higher growth rates and lower risk tend to justify a higher PE, while slower growth or higher risk usually mean a lower, more conservative multiple is warranted. Currently, eToro Group trades at a PE of 17.5x. For comparison, the Capital Markets industry average PE stands at 25.8x, and its peer group averages just 5.9x. On the surface, eToro’s valuation seems much closer to the sector norm than to its peers, signaling the market sees it as stronger or more stable than some competitors, but not quite at the industry’s top end.

This is where Simply Wall St’s "Fair Ratio" comes in. Unlike regular peer or industry comparisons, the Fair Ratio takes into account unique factors like eToro’s growth profile, risk, margins, size, and industry conditions to tailor a benchmark PE specifically for the company. By looking beyond simplistic averages, it provides a more precise gauge of real value. In this context, eToro Group’s current PE is almost right on top of its proprietary Fair Ratio, meaning the market is valuing the stock almost exactly as the company’s fundamentals would suggest.

Result: ABOUT RIGHT

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

Upgrade Your Decision Making: Choose your eToro Group Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply a user’s story or perspective about a company, connecting what they believe will happen to future revenue, earnings, and profit margins with a fair value estimate, going beyond just the numbers to highlight why those numbers make sense.

Narratives tie together a company’s story, a financial forecast, and a personalized fair value, making it easier to see how your outlook shapes your investment thinking. Narratives are available to everyone on Simply Wall St’s Community page, already used by millions of investors looking to make smarter decisions.

What makes Narratives especially powerful is their dynamic nature. As soon as new information or earnings emerge, Narratives update automatically, keeping you in sync with the latest shifts. When you compare your own fair value with the current price, it becomes clear whether it is time to buy, sell, or hold.

For example, with eToro Group, some investors see high growth opportunities and set a far higher fair value, while others take a cautious view based on recent declines and arrive at a much lower estimate. Both perspectives are just a Narrative away.

Do you think there's more to the story for eToro Group? Create your own Narrative to let the Community know!

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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