Is Allstate Poised for More Gains After 8.8% Rally and Strong Earnings Momentum?

Trying to figure out what to do with Allstate stock? You are not alone. With a strong run over the last five years, climbing 150.7%, and a 17.4% gain in just the past year, Allstate has grabbed the attention of investors who want both growth and stability. Even with a slight dip of 1.2% this week, the stock has shown remarkable resilience, posting a 3.6% rise in the past month and an impressive 8.8% return year-to-date.

Much of this long-term ascent has come as investors reassess risk in the insurance sector and shift capital toward established names like Allstate. Macroeconomic trends and shifting interest rate expectations have quietly helped push insurance valuations higher. This has given Allstate additional momentum as a perceived safe choice among property and casualty insurers. Many are asking if now is the right time to jump in, take profits, or simply hold tight.

When we peel back the surface and dig into Allstate’s value score, which is an impressive 5 out of 6 on common valuation checks, it is clear the market has not fully caught up to the fundamentals. How are these valuation checks actually performed? In the next section, we will walk through exactly how Allstate stacks up on each major metric. Later, we will explore an even smarter way to think about valuation that savvy investors should know.

Allstate delivered 17.4% returns over the last year. See how this stacks up to the rest of the Insurance industry.

Approach 1: Allstate Excess Returns Analysis

The Excess Returns valuation model looks at how much profit Allstate generates above the minimum that investors require for providing capital, measuring what is known as excess return. It focuses on two main factors: how efficiently the company puts shareholder equity to work, and whether this efficiency is expected to endure in the future. For Allstate, analysts see a strong track record and positive outlook.

Breaking down the numbers, Allstate's current Book Value stands at $83.40 per share. A Stable Book Value is projected to reach $108.32 per share. Its Stable Earnings Per Share (EPS) are estimated at $24.94, based on weighted future Return on Equity estimates from 11 analysts. With a Cost of Equity of $7.34 per share and an average Return on Equity of 23.02%, the business generates Excess Return of $17.60 per share, a sign of ongoing value creation.

Given these robust fundamentals, the Excess Returns model estimates Allstate’s intrinsic value at $584.48 per share. Since this is 64.3% above where Allstate currently trades, the discount signals a strong undervaluation by the market.

Result: UNDERVALUED

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

Our Excess Returns analysis suggests Allstate is undervalued by 64.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Allstate Price vs Earnings

Price-to-Earnings (PE) is widely regarded as a reliable valuation metric for consistently profitable companies like Allstate. It gives a quick snapshot of how much investors are willing to pay for each dollar of earnings, making it particularly relevant for insurers with stable bottom lines.

Growth expectations and perceived risk play major roles in what is considered a “normal” or “fair” PE ratio. Companies with strong growth prospects and lower risk can command higher PE multiples. Those facing uncertainty or stagnant earnings may warrant a lower multiple.

Allstate currently trades at a PE ratio of 9.6x. For context, the average PE among direct peers is 13.2x, and the broader insurance industry average stands even higher at 14.2x. This suggests the market is assigning Allstate a significant discount compared to its sector.

To offer a more tailored benchmark, Simply Wall St uses a “Fair Ratio,” which in Allstate’s case is 10.6x. Unlike the blunt approach of comparing peers or industry averages, the Fair Ratio looks at the company’s actual growth, profit margins, risk profile, industry specifics, and market cap. This gives investors a more accurate sense of whether the stock is being fairly priced based on its unique profile.

Comparing Allstate’s current PE of 9.6x to its Fair Ratio of 10.6x, the stock appears undervalued based on this more nuanced metric.

Result: UNDERVALUED

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 Allstate 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 your own story about Allstate, a way to connect the numbers, like future revenue or margins, to why you believe the company is undervalued or overvalued, and how its future might play out. Rather than relying only on preset ratios or pure forecasts, Narratives let you build a clear bridge between what’s happening in Allstate’s business, your financial forecast (such as assumed fair value and estimates of future earnings), and a price you think makes sense to buy or sell at.

Narratives are easy to create and update on Simply Wall St’s Community page, where millions of investors share and compare them. This tool helps you make personalized, data-driven decisions by showing how your view of Allstate stacks up against the current share price in real time. Narratives also update dynamically, so when new earnings or major news break, your analysis and fair value can shift instantly to reflect what’s changed.

For example, some investors with an optimistic outlook forecast Allstate’s fair value at $275, while more cautious perspectives see a value closer to $157. This demonstrates how Narratives can reflect diverse opinions and guide smarter investment decisions.

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