- If you are wondering whether Assurant, at around US$227 per share, offers good value today or if most of the upside is already behind it, this article is for you.
- The stock has eased back recently, with a 1% decline over the last 7 days and a 5.8% decline over the last 30 days, even though the 1 year return sits at 14.6% and the 3 year return is 99.2%.
- These moves sit against a backdrop of ongoing interest in financial and insurance names, as investors reassess where they want exposure in their portfolios. While short term swings can grab attention, the key question for Assurant is how its fundamentals line up with what the market is currently willing to pay.
- On Simply Wall St’s valuation checks, Assurant records a value score of 4 out of 6, which suggests it screens as undervalued on several measures. Next we will look at those methods side by side, before finishing with a more rounded way to think about valuation beyond any single model.
Approach 1: Assurant Excess Returns Analysis
The Excess Returns model looks at how efficiently a company turns its equity base into profits above its cost of capital, then capitalises those surplus returns into an intrinsic value per share.
For Assurant, the model starts with a Book Value of $117.92 per share and a Stable EPS of $22.94 per share, based on weighted future Return on Equity estimates from 6 analysts. That implies an Average Return on Equity of 16.39% on a Stable Book Value of $139.96 per share, also sourced from analyst book value estimates.
The Cost of Equity is set at $9.77 per share, so the Excess Return is $13.17 per share. In simple terms, the model assumes Assurant earns more on its equity than it costs to fund that equity, and it treats that difference as value created for shareholders.
Combined, these inputs feed into an Excess Returns valuation that indicates an intrinsic value of about $509 per share, compared with a current share price around $227. That gap implies the shares screen as 55.4% undervalued on this method.
Result: UNDERVALUED
Our Excess Returns analysis suggests Assurant is undervalued by 55.4%. Track this in your watchlist or portfolio, or discover 47 more high quality undervalued stocks.
Approach 2: Assurant Price vs Earnings
For a profitable company like Assurant, the P/E ratio is a useful yardstick because it links what you pay for the stock directly to the earnings it generates per share. You can think of it as the market’s snapshot of what those earnings are worth today, given expectations and perceived risk.
Growth expectations and risk both influence what a “normal” or “fair” P/E should be. Higher expected earnings growth or lower perceived risk can justify a higher P/E, while lower growth or higher risk usually lines up with a lower multiple. Assurant currently trades on a P/E of 13.05x, compared with an Insurance industry average of 11.85x and a peer average of 14.20x.
Simply Wall St also calculates a proprietary “Fair Ratio” for Assurant of 14.51x. This goes beyond simple peer or industry comparisons because it folds in factors like earnings growth, profit margins, size and risk characteristics, as well as the company’s industry. By comparing the current P/E of 13.05x with the Fair Ratio of 14.51x, the shares are classified as undervalued on this metric.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Assurant Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These let you attach a clear story about Assurant to concrete numbers such as your own fair value, revenue, earnings and margin estimates. You can then link that story to a forecast and a fair value that you can compare to the live share price, and have it update automatically on Simply Wall St’s Community page when fresh news or earnings arrive. For example, one investor might build a bullish Assurant Narrative around the analysts’ higher fair value of about US$261 with revenue growing near 6.0%, an 8.08% profit margin and a future P/E of 12.43x. Another investor might lean on the lower, earlier analyst target of US$241 and take a more cautious view on margins. Both can then use their Narrative to decide whether the current price near US$227 looks attractive or stretched.
Do you think there's more to the story for Assurant? Head over to our Community to see what others are saying!
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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