Is AllianceBernstein (AB) Stock Still Undervalued? A Fresh Look at Its Latest Valuation Metrics

AllianceBernstein Holding (AB) stock has edged higher recently, drawing attention from investors curious about its current valuation and performance. Many are re-examining its fundamentals, particularly in light of recent shifts in broader financial markets.

See our latest analysis for AllianceBernstein Holding.

After a solid stretch this year, AllianceBernstein Holding’s share price has climbed 7.3% year-to-date. Long-term investors have enjoyed a 17.1% total shareholder return over the past twelve months, suggesting that momentum could still be building as investor sentiment turns more positive following recent market shifts.

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But with shares not far from analyst price targets and recent gains fresh in mind, is AllianceBernstein still undervalued, or has the market already priced in the company’s future growth potential and outlook?

Price-to-Earnings of 11.2x: Is it justified?

AllianceBernstein is trading at a price-to-earnings ratio of 11.2x, which is well below peers and the industry average at the last close price of $39.75. This suggests investors may be undervaluing its earnings compared to other US capital market companies.

The price-to-earnings (P/E) ratio measures how much the market is willing to pay for each dollar of the company’s earnings. In asset management and capital markets, this ratio offers insight into whether the company’s profitability is valued highly or if the market is skeptical about future growth or earnings stability.

AllianceBernstein's P/E multiple is materially lower than the US Capital Markets industry average of 25.2x as well as the peer average of 15x. The fair price-to-earnings ratio is estimated at 13.1x, a level the market could move toward if sentiment shifts.

Explore the SWS fair ratio for AllianceBernstein Holding

Result: Price-to-Earnings of 11.2x (UNDERVALUED)

However, slowing net income growth and a recent short-term share decline could challenge the optimistic valuation outlook for AllianceBernstein in the future.

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

Another View: Checking Against Discounted Cash Flow

Looking from a different angle, our DCF model also suggests AllianceBernstein is trading below its fair value, estimating a price closer to $46.42 compared to the current $39.75. This points to potential undervaluation, but models cannot predict sentiment shifts. Will the market agree in the months ahead?

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 850 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 this perspective doesn't match yours, or you want to dig deeper on your own, you can craft a unique take on AllianceBernstein in just a few minutes. Do it your way.

A great starting point for your AllianceBernstein Holding research is our analysis highlighting 3 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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