It's been a great afternoon session for Everest Re investors, who saw their shares rise 2.2% to a price of $351.88 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Everest Re's Valuation Is in Line With Its Sector Averages:
Everest Re Group, Ltd., through its subsidiaries, provides reinsurance and insurance products in the United States, Bermuda, and internationally. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 14.34 and an average price to book (P/B) ratio of 1.57. In contrast, Everest Re has a trailing 12 month P/E ratio of 20.8 and a P/B ratio of 1.52.
When we divideEverest Re's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.27, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.
Low Debt Levels but a Declining EPS Growth Trend:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $8,231 | $9,485 | $11,301 | $11,985 |
| Interest Income (MM) | -$32 | -$36 | -$70 | -$101 |
| Net Margins | 12.26% | 5.42% | 12.2% | 4.98% |
| Net Income (MM) | $1,009 | $514 | $1,379 | $597 |
| Earnings Per Share | $24.7 | $12.78 | $34.62 | $16.92 |
| EPS Growth | n/a | -48.26% | 170.89% | -51.13% |
| Diluted Shares (MM) | 41 | 40 | 39 | 43 |
| Free Cash Flow (MM) | $1,852 | $2,874 | $3,833 | $3,695 |
| Long Term Debt (MM) | $237 | $1,513 | $743 | $737 |
| LT Debt to Equity | 0.03 | 0.16 | 0.07 | 0.09 |
Everest Re has growing revenues and no capital expenditures and low debt levels. Additionally, the company's financial statements display decent net margins with a negative growth trend and consistent free cash flow. However, the firm has declining EPS growth.
