Assessing AllianceBernstein Holding’s Valuation Following Strategic Expansion Into Asian Insurance Market

AllianceBernstein Holding (AB) is making headlines after announcing an equity investment in Fortitude Carlyle Asia Reinsurance, Ltd. This move brings the company deeper into Asia's insurance industry and adds a new dimension to its asset management strategy.

See our latest analysis for AllianceBernstein Holding.

Momentum for AllianceBernstein Holding has gathered pace over the last year, with a 1-year total shareholder return of 14.1 percent and an impressive 5-year figure of 102 percent. While the share price has recently seen some short-term volatility, including an 8 percent dip over the past quarter, long-term holders have still outperformed the sector. This new Asia move could boost growth sentiment further.

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With shares trading just below analyst targets and a notable intrinsic discount, the fundamentals suggest potential value. However, recent momentum raises the question: is this a genuine buying opportunity, or has the market already accounted for future growth?

Price-to-Earnings of 11.5x: Is it justified?

AllianceBernstein Holding is currently trading at a price-to-earnings (P/E) ratio of 11.5x, noticeably below its sector peers and industry averages. With the last close at $39.35, this suggests investors may be undervaluing the company’s earnings compared to its competitors.

The price-to-earnings ratio is a popular metric that shows how much investors are willing to pay for each dollar of earnings. In capital markets, a lower P/E versus industry norms may indicate the expectation of slower future earnings or missed growth catalysts.

For AB, this lower P/E looks particularly attractive given its strong recent earnings growth of 15.3% versus the industry average of 15.2%. In addition, the figure is well below both the US Capital Markets industry average of 26x and the estimated fair price-to-earnings ratio of 13x. This is a level that the market could migrate toward if confidence builds.

Explore the SWS fair ratio for AllianceBernstein Holding

Result: Price-to-Earnings of 11.5x (UNDERVALUED)

However, flat annual net income growth and recent short-term share price declines present risks that could temper optimism around AllianceBernstein’s valuation story.

Find out about the key risks to this AllianceBernstein Holding narrative.

Another View: What Does Our DCF Model Say?

While the low price-to-earnings ratio paints a picture of value, the Simply Wall St DCF model offers another perspective. According to our estimates, AllianceBernstein's share price sits about 16% below the DCF-derived fair value. This suggests further upside potential, but DCF models rely on long-term forecasts. How reliable are those projections in a complex market?

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 AllianceBernstein Holding 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 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 AllianceBernstein Holding Narrative

If you want to look at the numbers from your own perspective, you can easily build your own investment story in just a few minutes. Do it your way.

A great starting point for your AllianceBernstein Holding research is our analysis highlighting 4 key rewards and 4 important warning signs 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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