Apollo Global Management has pulled back sharply in recent months after a strong multi year run, which puts fresh focus on whether the current share price lines up with the returns the business earns on its capital.
- Over the past 5 years the stock has gained 113%, so any reassessment of the returns Apollo generates on the money it deploys could carry real weight for long term holders.
- With potential multi billion transactions on the table, from a proposed US$20b purchase of Johnson & Johnson’s DePuy Synthes unit to large financing roles in media and AI related deals, the pipeline may shape how efficiently Apollo can reinvest capital and the timing of cash flows back to shareholders.
- What if you looked at Apollo Global Management through its earnings instead? See why Apollo Global Management's 37.2x P/E tells a different valuation story.
The issue now is whether the returns Apollo Global Management earns on its capital are strong and durable enough to justify where the stock trades today.
If you are interested in how other companies are putting capital to work after significant moves like Apollo Global Management's pullback and deal pipeline, start your research with 32 high quality undervalued stocks.
Is Apollo Global Management Still Cheap on Excess Returns?
The Excess Returns model looks at how much value Apollo Global Management creates above the cost of its equity capital. On this lens, the business is modeled with a book value of $34.04 per share rising toward a stable $49.72, supported by a stable EPS estimate of $8.01 per share from analyst forecasts. The average modeled return on equity is 16.11%, which sits above the implied cost of equity of $3.62 per share, leaving an excess return of $4.39 per share in the framework.
This gap between return on equity and funding cost helps explain why the Excess Returns projections put Apollo Global Management's estimated intrinsic value substantially above the current share price of $119.00. The potential US$20b DePuy Synthes acquisition is a good example of why the market may be cautious, because large deals can pressure near term returns even when the model still points to value creation over time. For readers who want to see how that excess return stream translates into a per share estimate, the full Excess Returns calculation is available in the detailed model output. Find out what Apollo Global Management could be worth using our Excess Returns estimate.
The Apollo Global Management Narrative: What Would Justify Today's Price?
Narratives on Apollo Global Management pick up where the valuation puzzle above leaves off. They spell out which paths for future growth, margins and earnings would need to play out for the stock to be worth materially more or materially less than today’s price, and they sit on Simply Wall St's Community page. Rather than relying on a single multiple or model result, each narrative lays out the assumptions behind its view of fair value so you can compare those expectations with the actual numbers as they are reported.
One of the top community narratives on Apollo Global Management: 25% undervalued
"Apollo's inclusion in the S&P 500 is expected to broaden its shareholder base, leading to potential growth in public market exposure and thus…"
Discover why this Narrative puts Apollo Global Management at 25% undervalued.
One more Apollo Global Management check that belongs beside the price tag
Valuation is only half the story for Apollo Global Management, because the research screen has also flagged specific risk checks that informed investors usually read before forming any judgment. Take a closer look at 2 warning signs before settling on a valuation.
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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