- If you are wondering whether White Mountains Insurance Group at around US$2,215 per share still offers value, you are not alone. Many investors are asking the same question.
- The stock has been relatively steady over the last week with a 0.4% decline, while the 30 day return of 8.3% and 1 year return of 20.7% sit alongside 3 and 5 year returns of 59.3% and 91.8% respectively.
- Recent attention on insurers and holding companies has focused on how they allocate capital and manage risk across businesses. This helps frame how investors look at a group like White Mountains Insurance Group. Broader sector news around interest rate expectations and asset valuations has also influenced how investors think about book values and transaction prices in insurance related holdings.
- Our valuation model currently gives White Mountains Insurance Group a 2 out of 6 valuation score. Next we will walk through traditional methods like DCFs and multiples, then finish with a broader framework that can give you an even richer picture of what the stock might be worth.
White Mountains Insurance Group scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: White Mountains Insurance Group Excess Returns Analysis
The Excess Returns model looks at how much profit a company is expected to earn on its equity, after covering the required return that shareholders demand. In simple terms, it asks whether each dollar of equity is likely to earn more or less than the cost of that equity.
For White Mountains Insurance Group, the model uses a Book Value of $2,217.38 per share and a Stable EPS of $102.60 per share, based on the median return on equity from the past 5 years. The implied Cost of Equity is $123.24 per share. This leads to an Excess Return of $20.64 per share, meaning expected earnings sit below the required return. The Average Return on Equity used in the model is 5.81%, with a Stable Book Value assumption of $1,766.11 per share.
Using these inputs, the Excess Returns framework estimates an intrinsic value that implies the stock is 86.5% overvalued relative to the current share price of about $2,215.
Result: OVERVALUED
Our Excess Returns analysis suggests White Mountains Insurance Group may be overvalued by 86.5%. Discover 49 high quality undervalued stocks or create your own screener to find better value opportunities.
Approach 2: White Mountains Insurance Group Price vs Earnings
The P/E ratio is a common way to think about valuation for profitable companies because it links what you pay for each share to the earnings that support that price. It gives you a quick sense of how many dollars you are paying for one dollar of current earnings.
What counts as a “normal” P/E depends on how investors view a company’s growth outlook and risk profile. Higher expected growth or lower perceived risk often support a higher P/E, while slower growth or higher risk usually point to a lower P/E. So context really matters when you compare P/E ratios.
White Mountains Insurance Group currently trades on a P/E of about 4.95x. This sits below the Insurance industry average P/E of 12.02x and also below the peer group average of 11.08x that we track for this company. Simply Wall St also uses a “Fair Ratio”, which is the P/E it would expect for White Mountains Insurance Group after considering its earnings profile, industry, profit margin, market cap and risk factors. This Fair Ratio can be more tailored than a straight industry or peer comparison because it adjusts for company specific traits rather than relying on broad group averages.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your White Mountains Insurance Group Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your story about a company, linked directly to your assumptions on fair value, future revenue, earnings and margins.
On Simply Wall St, within the Community page used by millions of investors, a Narrative connects the business story to a financial forecast and then to a fair value. This allows you to quickly compare that fair value to the current share price and decide whether the gap looks attractive, too tight or too uncertain for you.
Narratives on the platform update automatically when new information such as news or earnings is added. As a result, your story and numbers stay aligned without you needing to rebuild your work each time something changes.
For example, one White Mountains Insurance Group Narrative might assume a relatively low fair value and cautious profitability outlook. Another might use a higher fair value based on different views about future earnings quality and capital allocation, and both can sit side by side for you to compare.
Do you think there's more to the story for White Mountains Insurance Group? 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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