• If you are wondering whether Hamilton Insurance Group's current share price still offers value after a strong run, the recent numbers give you plenty to think about.
• The stock closed at US$28.61, with a 0.2% move over the last 7 days, a 9.4% decline over 30 days, a 4.9% gain year to date, and a 43.5% return over the last year.
• These mixed short term moves against a strong 1 year return have put the focus squarely on what investors are now willing to pay for Hamilton Insurance Group and why. Recent coverage has centered on how the company is positioned within the insurance space and how investors are reassessing risk and reward for the stock.
• On Simply Wall St's valuation checks, Hamilton Insurance Group has a valuation score of 5 out of 6. The rest of this article will walk through the main valuation methods used to reach that view, then finish with a different way of thinking about what the stock may be worth.

Hamilton Insurance Group delivered 43.5% returns over the last year. See how this stacks up to the rest of the Insurance industry.

Approach 1: Hamilton Insurance Group Excess Returns Analysis

The Excess Returns model looks at how much profit a company is expected to generate above the return that equity investors typically require, then capitalizes those extra profits into an estimated per share value.

For Hamilton Insurance Group, the model starts with a Book Value of $28.50 per share and a Stable EPS of $5.26 per share, based on weighted future Return on Equity estimates from 5 analysts. The Average Return on Equity sits at 14.70%, compared with a Cost of Equity of $2.49 per share. The difference between what the company is expected to earn and what investors require is the Excess Return, estimated at $2.76 per share.

The model also uses a Stable Book Value of $35.75 per share, based on weighted future Book Value estimates from 3 analysts. Combining these inputs, Simply Wall St arrives at an intrinsic value of about $113.12 per share. Compared with the recent share price of $28.61, this implies the stock is 74.7% undervalued according to this approach.

Result: UNDERVALUED

Our Excess Returns analysis suggests Hamilton Insurance Group is undervalued by 74.7%. Track this in your watchlist or portfolio, or discover 62 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Hamilton Insurance Group.

Approach 2: Hamilton Insurance Group Price vs Earnings

For profitable companies, the P/E ratio is a helpful way to link what you pay for the stock to the earnings the business is currently generating. Investors usually accept a higher or lower P/E depending on what they expect for future earnings growth and how much risk they see in those earnings.

Hamilton Insurance Group is trading on a P/E of 4.93x. That is below the Insurance industry average P/E of 10.86x and below the peer group average of 9.65x, so the market is currently pricing Hamilton’s earnings at a lower level than these benchmarks.

Simply Wall St also calculates a “Fair Ratio” for Hamilton of 11.46x. This is a proprietary estimate of what the P/E might be, given factors such as the company’s earnings growth profile, its industry, profit margins, market capitalization and key risks. This can be more useful than a simple industry or peer comparison because it is tailored to Hamilton’s own fundamentals rather than broad sector averages. Comparing the Fair Ratio of 11.46x with the current P/E of 4.93x suggests the shares are trading below this estimated range.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Hamilton Insurance Group Narrative

Earlier it was mentioned that there is an even better way to think about valuation. On Simply Wall St you can use Narratives on the Community page to turn your view of Hamilton Insurance Group into a simple story that links your assumptions about future revenue, earnings and margins to a forecast, then to a fair value. This allows you to compare that fair value with today’s share price to frame your own buy or sell decisions. It also automatically refreshes your Narrative when new information such as earnings or news arrives. One investor might build a more optimistic Hamilton Narrative that is closer to the highest analyst price target of US$35.00, while another might prefer a more cautious Narrative closer to the lowest target of US$29.00. Both can clearly see how their story, their numbers and their view of fair value fit together.

Do you think there's more to the story for Hamilton 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Disclaimer:This article represents the opinion of the author only. It does not represent the opinion of Webull, nor should it be viewed as an indication that Webull either agrees with or confirms the truthfulness or accuracy of the information. It should not be considered as investment advice from Webull or anyone else, nor should it be used as the basis of any investment decision.