- If you are wondering whether Aon’s current share price still reflects its underlying worth, you are not alone. Valuation is exactly where this review is heading.
- The stock last closed at US$325.97, with returns of 0.3% over 30 days and a 16.4% decline over the past year, which may have changed how the market views its risk and reward profile.
- Recent coverage has focused on Aon’s position as a major player in insurance brokerage and risk solutions, with attention on how its business mix and capital allocation choices are influencing sentiment. This backdrop helps frame the recent share price performance and sets up an important question about what investors are really paying for today.
- Aon currently has a valuation score of 4 out of 6. This will be unpacked using several common valuation approaches, and then rounded out with a look at a more complete way to think about value at the end of the article.
Find out why Aon's -16.4% return over the last year is lagging behind its peers.
Approach 1: Aon Excess Returns Analysis
The Excess Returns model looks at how much profit Aon earns on shareholders’ equity above its estimated cost of equity, then capitalizes that “excess” to arrive at an intrinsic value per share.
For Aon, the starting point is a Book Value of US$43.60 per share and a Stable EPS of US$24.11 per share, based on the median return on equity from the past 5 years. The model assumes a Cost of Equity of US$4.13 per share, which leaves an Excess Return of US$19.98 per share. That is paired with an Average Return on Equity of 43.28% and a Stable Book Value estimate of US$55.71 per share, sourced from weighted future book value estimates from 3 analysts.
Using these inputs, the Excess Returns model points to an intrinsic value of about US$554.16 per share. Compared with the recent share price of US$325.97, this suggests the stock is about 41.2% undervalued on this measure.
Result: UNDERVALUED
Our Excess Returns analysis suggests Aon is undervalued by 41.2%. Track this in your watchlist or portfolio, or discover 55 more high quality undervalued stocks.
Approach 2: Aon Price vs Earnings
For a profitable business like Aon, the P/E ratio is a useful way to relate what you pay for each share to the earnings that support it. Investors usually accept a higher P/E when they expect stronger earnings growth or see lower risk, and a lower P/E when they expect slower growth or see higher risk.
Aon currently trades on a P/E of 18.90x. That sits above the Insurance industry average P/E of 10.92x, but below the peer group average of 24.15x. This suggests the market is valuing Aon more highly than the sector overall but not at the top end of its closer peers.
Simply Wall St’s Fair Ratio is a proprietary estimate of what a more tailored P/E might be for Aon, based on factors like its earnings growth profile, profit margins, industry, market cap and specific risks. Because it is calibrated to the company’s own fundamentals rather than just broad group averages, it can provide a more company specific reference point than simple peer or industry comparisons. For Aon, the Fair Ratio is 12.99x, which is below the current 18.90x P/E, suggesting the shares trade above this customised reference level.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Aon Narrative
Earlier it was mentioned that there is an even better way to understand valuation, so Narratives are introduced here as simple stories you build around Aon that connect your view of its future revenue, earnings and margins to a financial forecast and then to a Fair Value that you can compare with the current price.
On Simply Wall St’s Community page, Narratives let you set out your assumptions in plain language and numbers, then automatically translate them into a valuation that updates when new information arrives, such as news, earnings or changes in analyst estimates.
This helps you decide whether Aon looks attractive or stretched for your own view, because you can see at a glance whether your Fair Value sits above or below the market price, rather than relying only on headline P/E or a single target price.
For example, one investor might align with the most bullish analyst Narrative, using a Fair Value near US$443.00 based on confidence in revenue, margins and a future P/E of 25.3x. In contrast, another investor might sit closer to the most cautious Narrative near US$326.00, reflecting more weight on risks like softer P&C pricing, AI related cost pressure and macro volatility.
Do you think there's more to the story for Aon? 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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