White Mountains Insurance Group (WTM): Taking Stock of Valuation After a Strong Three-Year Shareholder Return

White Mountains Insurance Group (WTM) has quietly outperformed the broader insurance space over the past 3 years, and that kind of steady compounding always invites a closer look at what is driving the story.

See our latest analysis for White Mountains Insurance Group.

Over the past year, the 30 day share price return of 5.46 percent and 90 day share price return of 12.78 percent suggest momentum is quietly building on top of a three year total shareholder return of 54.92 percent. The latest share price of 2,025.55 dollars continues to reflect the market’s confidence in White Mountains Insurance Group’s capital allocation and underwriting discipline.

If White Mountains Insurance Group’s steady compounding has caught your eye, now could be a moment to broaden your search and discover fast growing stocks with high insider ownership

But with shares trading above 2,000 dollars and a strong multi year track record already on the scoreboard, is White Mountains Insurance Group still flying under the radar as a value opportunity, or is the market fully pricing in future growth?

Price to Earnings of 36.7x, Is it Justified?

On a last close of 2,025.55 dollars, White Mountains Insurance Group trades at a price to earnings ratio of 36.7 times, a clear premium to peers.

The price to earnings multiple compares what investors pay today with the company’s current earnings, a common yardstick for mature, profit generating insurers.

With earnings having declined by an average of 3.6 percent per year over the past five years, and net profit margins slipping from 23.4 percent to 5.6 percent, this elevated price to earnings suggests the market is paying up for steadier capital allocation and niche exposure rather than near term profit growth.

The contrast is stark. White Mountains Insurance Group’s 36.7 times price to earnings sits well above both the broader US insurance industry average of 13.1 times and a peer average of 14.9 times, signaling that investors are assigning a rich premium multiple that assumes materially different economics than the sector norm.

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

Result: Price to earnings of 36.7x (OVERVALUED)

However, stretched valuation, slowing earnings and margin compression mean that any underwriting misstep or softer capital deployment could quickly challenge the recent momentum.

Find out about the key risks to this White Mountains Insurance Group narrative.

Another View: Our DCF Fair Value Check

While the current price to earnings ratio looks stretched, our DCF model paints a similar picture, suggesting White Mountains Insurance Group is trading above an estimated fair value of 1,172.01 dollars. That gap narrows the margin of safety, but does it fully capture the group’s niche strengths?

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 White Mountains Insurance 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 917 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 White Mountains Insurance Group Narrative

If this perspective does not fully align with your own view, you can review the numbers yourself and shape a fresh story in minutes: Do it your way

A great starting point for your White Mountains Insurance Group research is our analysis highlighting 3 important warning signs that could impact your investment decision.

Ready for more investment ideas?

If White Mountains Insurance Group feels fully priced, do not stop here. Use the Simply Wall St Screener to uncover your next edge before others catch on.

• Target reliable income streams by reviewing these 14 dividend stocks with yields > 3% and lock onto companies paying shareholders first, not last.
• Ride powerful secular trends through these 25 AI penny stocks and position your portfolio where long term growth and innovation collide.
• Capitalize on mispriced quality with these 917 undervalued stocks based on cash flows, where strong cash flows may not yet be reflected in market expectations.

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