A Look at F&G Annuities & Life’s Valuation as Strong Premium Growth Lifts Profit and Book Value Expectations

Financial momentum reshapes expectations for F&G Annuities & Life

F&G Annuities & Life (FG) is back on investors radar after a powerful run in net premiums earned and an upbeat outlook for book value growth that reframes its earnings trajectory.

See our latest analysis for F&G Annuities & Life.

Even with the latest share price at $33.01 and a solid 1 month share price return of 7.14%, the year to date share price return of negative 19.74% and 1 year total shareholder return of negative 24.78% show that this recent momentum is still repairing sentiment after a strong 3 year total shareholder return of 78.76%.

If this kind of rebound has you thinking about where else the market might be mispricing growth potential, it is worth exploring fast growing stocks with high insider ownership for more ideas.

With premiums surging, book value poised to jump, and the share price still lagging its fundamentals, the key question now is simple: Is F&G trading at a discount, or is it already pricing in that future growth?

Price-to-Earnings of 9.9x: Is it justified?

On our numbers, F&G Annuities & Life screens as undervalued, with the SWS DCF model pointing to a fair value of $42.73 versus the last close of $33.01, while the market currently prices the stock at a modest 9.9x earnings.

The DCF approach estimates what the business is worth by projecting its future cash flows and discounting them back to today using a required return. For an insurer that has only recently become consistently profitable and is still normalising margins, this forward looking lens is useful because it looks through short term noise in reported results.

In F&G's case, the combination of improving net profit margins, high quality earnings and steady but not explosive revenue growth suggests that the current share price may not fully reflect the cash generation implied by management's trajectory. The gap between the $42.73 DCF estimate and the $33.01 trading price implies the market is still skeptical about how durable those earnings will be.

Look into how the SWS DCF model arrives at its fair value.

Result: DCF Fair value of $42.73 (UNDERVALUED)

However, investors still face risks from interest rate volatility and potential credit losses in F&G's investment portfolio, which could pressure margins and earnings.

Find out about the key risks to this F&G Annuities & Life narrative.

Analyst targets send a cooler signal

While our DCF work points to meaningful upside, Wall Street is more cautious. The average analyst target sits at $34, only about 3% above the current $33.01 share price. This implies that, in their view, much of the near term improvement may already be reflected.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out F&G Annuities & Life 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 907 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 F&G Annuities & Life Narrative

If you see the data differently, or simply want to test your own assumptions, you can build a complete view yourself in just a few minutes: Do it your way.

A good starting point is our analysis highlighting 1 key reward investors are optimistic about regarding F&G Annuities & Life.

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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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