Everest Group (EG) has been on investors’ radar following recent shifts in its stock performance. The company’s shares have seen some fluctuation lately, prompting questions around valuation and future prospects as market sentiment adjusts.
Everest Group’s share price has experienced a bumpy ride this year, dropping 4.6% year-to-date and recently dipping to $346.69. The bigger story, however, is the 1-year total shareholder return of -10%, which stands in contrast to the company’s strong three-year and five-year total returns of 36% and 92% respectively. While momentum has cooled off in the short term, the longer-term track record suggests there may be more to consider for investors who look past recent volatility.
The recent pullback in Everest Group shares raises an intriguing question for investors: is the market overlooking hidden value in the stock, or is all future growth already reflected in today’s price?
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Most Popular Narrative: 10.3% Undervalued
Everest Group's most popular narrative points to a fair value that is over 10% above the current share price, suggesting overlooked upside potential as the consensus leans higher than where the stock trades today.
Expansion into international and specialty insurance lines, including engineering, renewable energy, marine, and accident business, is leveraging global economic growth and increasing insurance penetration in emerging markets. This diversification is already delivering double-digit premium growth and is expected to provide sustained long-term revenue and earnings growth.
Want to know what really powers this valuation? The narrative centers on outsized future earnings growth, margin expansion, and a bold call on profit multiples that are rarely seen in this sector. Ready to uncover the exact profit forecasts and dramatic changes in margins that justify this target?
However, rising catastrophe risks and intensifying competition could quickly challenge Everest Group’s margin outlook and disrupt the bullish narrative currently driving valuations.
While long-term growth expectations suggest upside for Everest Group, its price-to-earnings ratio of 18.2x is notably higher than both its US insurance peers at 13.8x and the peer average of 13.6x. However, it remains below the fair ratio the market could eventually move towards, at 29.3x. Does this premium signal confidence in Everest’s earnings quality, or does it highlight risk if expectations falter?
If you see the story differently or want to dive into the numbers firsthand, you can craft your own thesis in just a few minutes with 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.
Valuation is complex, but we're here to simplify it.
Discover if Everest Group might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
