Loews (L): Is the Current Valuation Justified After a Strong Year-to-Date Share Price Surge?

Loews (L) has steadily climbed over the past month, posting an 8% gain in the past three months as investors take a closer look at its long-term value. Recent trading activity suggests ongoing interest in the stock's performance.

See our latest analysis for Loews.

Loews' momentum has been hard to ignore, with a share price that has surged nearly 25% year-to-date and a stellar 24% total shareholder return over the past year. This strong run builds on a hefty three-year total shareholder return of almost 85%, suggesting the company’s growth story still has plenty of chapters left to play out, even as investors continue to weigh the balance between recent gains and potential future upside.

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But with shares near their highs, the question remains: is Loews still trading at an attractive value, or has the market already accounted for its future growth potential, leaving little room for upside?

Price-to-Earnings of 14.9x: Is it justified?

Loews trades at a price-to-earnings (P/E) ratio of 14.9x, which puts it at a premium to both its peers and the industry average as of the last close at $104.94.

The P/E ratio compares a company’s stock price to its earnings per share, making it a crucial gauge for investors seeking to assess how richly the market values current and future profitability. For insurance companies like Loews, a higher P/E can reflect market confidence in sustained earnings. At these levels, it can also indicate that expectations are already priced in.

This valuation appears stretched relative to peers, as the industry average sits at just 12.7x. Loews is even more expensive compared to similar companies, where the average is 13.7x. Without evidence of rapid earnings growth or unique outperformance ahead, investors may be paying up for past success rather than future gains.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 14.9x (OVERVALUED)

However, sluggish revenue and earnings growth could put pressure on the current valuation, particularly if investor sentiment shifts toward more undervalued opportunities.

Find out about the key risks to this Loews narrative.

Another View: What Does DCF Suggest?

While Loews looks expensive on earnings multiples compared to industry averages, our DCF model presents a similar concern. The SWS DCF model estimates a fair value of $100.81, which is below the current price of $104.94. This suggests shares may be modestly overvalued. Could this signal limited upside for investors?

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 Loews 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 919 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 Loews Narrative

If you see things differently or want to dig deeper into the details, you can shape your own perspective in just a few minutes with Do it your way

A good starting point is our analysis highlighting 1 key reward investors are optimistic about regarding Loews.

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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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