eToro Group (ETOR): Assessing Valuation After a Notable One-Day Share Price Rebound

eToro Group (ETOR) has seen its stock shift in recent weeks, drawing attention from investors keen on understanding what is shaping the valuation. Market activity hints at a mix of changing sentiment and performance fundamentals.

See our latest analysis for eToro Group.

After a sharp sell-off earlier this year, eToro Group’s share price return has perked up in the last week with an 8.17% rebound in a single day, hinting at renewed investor optimism despite losses earlier in the quarter. Overall, momentum has been mixed. Short-term gains are emerging, but the stock is still working to climb out of a steeper year-to-date decline as markets reassess its long-term growth and risk profile.

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With the share price far below analyst targets and recent results showing mixed signals, the question remains: Is eToro Group trading at a bargain, or has the market fully accounted for its growth prospects?

Price-to-Earnings of 16.8x: Is it justified?

Compared to its last close price of $37.73, eToro Group is trading on a Price-to-Earnings (P/E) ratio of 16.8x, noticeably lower than both the US Capital Markets industry average and its peer group. This positions the stock as undervalued against sector benchmarks.

The P/E ratio expresses how much investors are willing to pay today per dollar of earnings. It is commonly used to gauge whether a company’s shares are priced appropriately relative to its profit potential. In the capital markets sector, where earnings can be cyclical, a P/E ratio well below industry standards may signal opportunity or reflect skepticism about future growth.

eToro Group’s P/E stands at 16.8x, while the industry average is 24x and the peer group sits at 17.4x. Our internal fair value assessment points to a P/E of 17.7x, a level the broader market could migrate toward if optimism around profit sustainability and growth persists. The company’s upbeat profit trajectory helps underpin this relative undervaluation, offering a compelling value case compared to its main rivals.

Explore the SWS fair ratio for eToro Group

Result: Price-to-Earnings of 16.8x (UNDERVALUED)

However, persistent revenue volatility and uncertainty regarding consistent annual income growth could challenge eToro Group’s current valuation and optimistic forecasts.

Find out about the key risks to this eToro Group narrative.

Another View: What Does Our DCF Model Say?

Looking at eToro Group through the lens of our DCF model adds a different perspective. The SWS DCF model estimates fair value at $45.32, about 16.7% above the current share price. This suggests shares might be undervalued, but are forecasts reliable enough to trust this gap? The answer could change how investors approach the stock.

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 eToro Group 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 863 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 eToro Group Narrative

If you see things differently or want to investigate the numbers yourself, it only takes a few minutes to craft your own perspective. So why not Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding eToro Group.

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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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