CNO Financial Group’s Valuation in Focus After Victory Park Acquisition and Strategic Growth Moves

If you have been keeping an eye on CNO Financial Group (CNO), there is a lot to unpack given the company’s latest move. The recent acquisition of a stake in Victory Park Capital Advisors signals that CNO is not content to stick to the script. It is actively working to expand its reach and build out a more diversified set of offerings. This kind of deal, paired with continued investments in technology and strategic acquisitions, shows intent from management to pursue new channels for growth and impact.

Stepping back, these moves come on the heels of solid progress in CNO’s core businesses. Over the year, the company has benefited from steady performance in its annuity, life, and health product lines, with a reported 19% total return in the past twelve months and jumps of nearly 8% year-to-date. Strategic share buybacks and dividend payments have also reinforced that management is focused on delivering value back to shareholders, while recent acquisitions hint at momentum picking up.

After a year of steady gains and expansion, the big question for investors is whether CNO is undervalued right now or if the market has already priced in this next chapter of growth.

Most Popular Narrative: 5.5% Undervalued

According to the most widely followed narrative, CNO Financial Group is considered undervalued by 5.5%, with the current share price sitting below its fair valuation.

Sustained investments in technology (e.g., automation, accelerated underwriting, digital CRM platforms) are improving agent productivity and operating leverage. This supports downward trends in the expense ratio and creates a pathway for higher net margins over the next several years.

Curious what’s powering this target price? The narrative hinges on some bold forecasts for CNO’s future: think expanding profits, margin improvements, and steady shareholder gains. How do all these moving pieces add up to a valuation premium? Discover the key expectations behind the story. There is more beneath the surface of these projections than meets the eye.

Result: Fair Value of $42.40 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent low interest rates or a sudden rise in long-term care claims could quickly dent profit margins and challenge the current valuation outlook.

Find out about the key risks to this CNO Financial Group narrative.

Another View: Discounted Cash Flow Perspective

Using our DCF model, the picture shifts. This approach weighs the present value of CNO’s future cash flows and currently suggests the stock is trading below its estimated fair value. However, does this method capture everything investors should know, or are key risks being overlooked?

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 CNO Financial 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 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 CNO Financial Group Narrative

If you are inspired to dig deeper or want to chart your own course, you can easily build your own perspective in just a few minutes. Do it your way

A great starting point for your CNO Financial Group research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

Looking for More Smart Investment Ideas?

Don't let your next winning opportunity slip by. Tap into expert-curated lists to boost your watchlist with unique companies tackling tomorrow’s biggest trends and financial shifts.

• Uncover high-potential, under-the-radar companies making waves in technology and healthcare by using our penny stocks with strong financials.
• Explore companies driving the artificial intelligence revolution in healthcare with our handpicked selection of healthcare AI stocks.
• Pursue stable returns and income growth from companies offering generous yields with our list of dividend stocks with yields > 3%.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com