- If you are wondering whether Aflac at around US$109.64 is offering fair value or a potential bargain, this article walks through what the current price might be indicating.
- The stock has been relatively steady recently, with a 2.3% return over the last 7 days, a 3.3% decline over 30 days, and returns of 0.5% decline year to date and 0.2% decline over 1 year, set against much stronger 3 year and 5 year returns of 81.6% and 137.7%.
- Recent coverage around Aflac has focused on its role as a large, established insurer and how investors view that position in a mature industry. That commentary helps frame why some shareholders may now be reassessing whether the current share price leaves enough room for future upside or is already pricing in much of that stability.
- Aflac currently has a valuation score of 2 out of 6, so next you will see how different valuation approaches arrive at that result and, by the end of the article, a more complete way to think about what that score may indicate for you.
Aflac scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Aflac Excess Returns Analysis
The Excess Returns model looks at how efficiently Aflac uses shareholder capital, asking whether its returns on equity are above the return investors typically require. Instead of focusing on raw earnings, it weighs how much value is generated over and above that equity cost.
For Aflac, the model uses a Book Value of $56.85 per share and a Stable EPS of $8.44 per share, based on weighted future Return on Equity estimates from 5 analysts. The Average Return on Equity is 14.06%, compared with a Cost of Equity of $4.19 per share. That gap produces an Excess Return of $4.25 per share, indicating value creation over the required return. The Stable Book Value input is $60.05 per share, based on estimates from 7 analysts.
Using these inputs, the Excess Returns framework produces an intrinsic value estimate of about $179.15 per share. Relative to the recent share price of around $109.64, this model indicates the stock is 38.8% undervalued.
Result: UNDERVALUED
Our Excess Returns analysis suggests Aflac is undervalued by 38.8%. Track this in your watchlist or portfolio, or discover 58 more high quality undervalued stocks.
Approach 2: Aflac Price vs Earnings
For a profitable insurer like Aflac, the P/E ratio is a straightforward way to connect what you pay for each share with the earnings that support it. Investors often look for a P/E that lines up with their expectations for growth and the level of risk they are taking on. Higher expected growth or lower perceived risk can support a higher P/E, while slower growth or higher risk usually points to a lower, more conservative P/E being appropriate.
Aflac currently trades at a P/E of 15.49x. That sits above the Insurance industry average of 11.25x and also above the peer group average of 14.28x. Simply Wall St’s Fair Ratio for Aflac is 11.61x. This Fair Ratio is a proprietary estimate of what a reasonable P/E might be given factors such as Aflac’s earnings profile, its industry, profit margins, market cap and specific risks.
Comparing Aflac’s P/E with broad industry and peer averages can be useful, but the Fair Ratio goes further because it attempts to adjust for company specific traits rather than relying on simple comparisons. Setting the current 15.49x P/E against the 11.61x Fair Ratio suggests the shares are trading richer than that tailored reference point.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Aflac Narrative
Earlier it was mentioned that there is an even better way to understand valuation, and that is where Narratives come in. They give you a clear story that links Aflac’s business context to a financial forecast and then to a fair value that you can compare with today’s price.
A Narrative is simply your own story about Aflac, written in numbers and words. You set assumptions for future revenue, earnings and margins, then see what those assumptions imply for a fair value per share.
On Simply Wall St’s Community page, Narratives are set up so you can quickly plug in views, compare your fair value to the current share price, and decide whether Aflac looks attractive, fully priced or expensive on your numbers.
These Narratives update when new information such as earnings, news on items like the recent cyberattack or distribution partnerships, or changes to analyst targets comes in. This means your fair value view is always tied to the latest data rather than a static spreadsheet.
For example, one investor might build a Narrative close to the higher US$130 analyst target if they focus on product rollout, digital initiatives and capital strength. Another might sit nearer the US$100 low target if they put more weight on Japan exposure, technology spending and slower U.S. sales. Both can immediately see how their story compares with the current price.
Do you think there's more to the story for Aflac? 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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