Everest Group (EG): Assessing Valuation After Weak Q3 Results Pressure Profitability and Investor Sentiment

Everest Group (EG) just took a hit after a tough third quarter, with higher underwriting expenses and a weaker combined ratio pressuring profitability and weighing on the share price.

See our latest analysis for Everest Group.

The stock has been choppy this year, with a recent rebound leaving the share price at $327.16 after a weak Q3 sparked an 11 percent slide and contributed to a negative year to date share price return. Even so, the five year total shareholder return remains solidly positive, suggesting longer term holders have still been rewarded despite fading near term momentum.

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With earnings wobbling but a still healthy long term track record, and analysts seeing upside to today’s price, the real question is whether Everest Group is now a mispriced compounder or if the market already anticipates its future growth.

Most Popular Narrative: 11.3% Undervalued

With Everest Group last closing at $327.16 against a narrative fair value near $369, the current gap centers on profits inflecting far faster than revenues.

Analysts assume that profit margins will increase from 4.5% today to 21.7% in 3 years time.

Analysts expect earnings to reach $3.6 billion (and earnings per share of $70.57) by about September 2028, up from $798.0 million today.

Read the complete narrative.

How does a company with shrinking top line still command a higher value tag, with profits leaping and the earnings multiple collapsing in tandem? The narrative’s math hides a bold earnings staircase, a dramatic margin reset, and a surprisingly modest future valuation bar. Curious which assumptions have to click perfectly into place for that to work?

Result: Fair Value of $368.86 (UNDERVALUED)

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

However, this upside case still hinges on catastrophe losses remaining manageable and casualty reserve trends behaving, both of which could quickly derail margin expansion.

Find out about the key risks to this Everest Group narrative.

Build Your Own Everest Group Narrative

If you would rather dig into the numbers yourself and challenge these assumptions, you can build a custom view in just a few minutes, Do it your way.

A great starting point for your Everest Group research is our analysis highlighting 3 key rewards and 1 important warning sign 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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