Is AXIS Capital Still an Opportunity After Strong 140% Five Year Surge?

Thinking about what to do with AXIS Capital Holdings stock? You are not alone. The insurance specialist has been hard to ignore, with shares climbing 22.8% over the past year and a remarkable 140.1% over the last five years. That kind of return gets attention, especially when compared to broader market benchmarks. Sure, the stock has pulled back slightly in the past month, down 2.5%, and drifted just 0.1% lower in the past week, but that's a normal part of longer-term growth stories. The larger trend continues to reflect confidence from investors and perhaps even a shifting view of the risks and rewards in the insurance industry as a whole.

So, what is driving all this excitement? Part of the conversation is value. By analyzing AXIS Capital Holdings through six valuation checks, it turns out the company is currently undervalued in every single metric, earning a value score of 6 out of 6. That is a rare profile in any sector, let alone insurance, where the market tends to price in plenty of caution. But before deciding whether AXIS is a buy, hold, or something to watch, it pays to break down exactly which valuation approaches matter most. As you will see at the end, there may be an even more insightful way to look at what the numbers really mean.

AXIS Capital Holdings delivered 22.8% returns over the last year. See how this stacks up to the rest of the Insurance industry.

Approach 1: AXIS Capital Holdings Excess Returns Analysis

The Excess Returns valuation model looks beyond traditional earnings and instead measures how effectively a company invests its capital relative to its cost of equity. Put simply, it focuses on the profitability a business generates above what investors require for taking on ownership risk.

For AXIS Capital Holdings, this approach yields some eye-opening numbers. The company reports a Book Value of $71.95 per share, with analyst estimates pointing to a Stable Book Value of $83.30 per share. Its Stable EPS, which is derived from weighted future Return on Equity estimates by five analysts, stands at $13.38 per share. Importantly, AXIS generates an excess return of $7.73 per share, comfortably surpassing its cost of equity of $5.64 per share. The average Return on Equity for AXIS is 16.06%, which signals strong performance and capital efficiency in a competitive insurance sector.

According to this model, the intrinsic discount for AXIS Capital Holdings sits at an impressive 67.5%. This suggests that the stock remains substantially undervalued compared to its intrinsic worth as modeled by excess returns. In summary, AXIS’s ability to produce profits well above its cost of capital makes for a compelling value profile in today’s market.

Result: UNDERVALUED

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

Our Excess Returns analysis suggests AXIS Capital Holdings is undervalued by 67.5%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: AXIS Capital Holdings Price vs Earnings

The price-to-earnings (PE) ratio is a widely trusted metric for valuing steady, profitable companies like AXIS Capital Holdings. This approach is especially meaningful for businesses generating consistent bottom-line profits, as it shows how much investors are willing to pay for each dollar of earnings. Generally, higher PE ratios reflect market optimism about future growth and stability. Lower ratios may signal risk or a potential bargain.

AXIS currently trades at a PE ratio of 8.6x. To put that in perspective, the industry average PE for insurance is 14.2x, and the average among close peers is 14.4x. This places AXIS well below both its direct competitors and the broader sector, despite its strong profitability and record of steady returns. On the surface, this might suggest that the market is underpricing AXIS shares based on near-term concerns or a lack of recognition for its performance.

However, Simply Wall St's proprietary Fair Ratio offers a deeper lens. Unlike a simple peer or industry comparison, the Fair Ratio adjusts for key factors like AXIS’s specific earnings growth, risk profile, profit margin, market capitalization, and unique industry traits. For AXIS, the Fair Ratio is calculated at 13.8x. Comparing this to its current PE of 8.6x, the stock is notably undervalued relative to what would be expected given its business fundamentals and growth trajectory.

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 AXIS Capital Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. Narratives are an accessible, dynamic tool that empowers you to attach a story to the numbers. This allows you to express your perspective on a company’s fair value, future revenue, earnings, and margins, rather than just accepting a one-size-fits-all forecast.

Simply put, a Narrative connects the company’s unique story to your financial forecast and then directly to a fair value. This makes investing feel less abstract and more like expressing your own viewpoint within a community. On Simply Wall St’s platform, Narratives are easy to browse and create on the Community page, where millions of investors share and update their perspectives.

This approach helps you decide when to buy or sell by showing how your projected Fair Value compares to the current Price. This way, you can act confidently rather than reactively. Narratives stay up to date automatically as new information such as news or earnings reports becomes available, always keeping your insights relevant.

For example, some investors in AXIS Capital Holdings see fair value as high as $130, citing opportunity in specialty insurance and technology. Others are more cautious and set it closer to $100, highlighting sector risks and tightening margins.

Do you think there's more to the story for AXIS Capital Holdings? 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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