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Assessing Allstate (ALL) Valuation After Recent Share Price Softness And Long Term Gains

Simply Wall St · 6d ago

Allstate (ALL) is back on investors’ radar after recent trading left the shares around $203.82, with mixed short term returns contrasting with stronger figures over the past year and multi year periods.

See our latest analysis for Allstate.

Recent trading softness, including a 2.08% one day share price decline and a 2.32% seven day share price return, contrasts with firmer longer term momentum, highlighted by an 11.79% 1 year total shareholder return and triple digit 5 year gains.

If Allstate has you looking at insurers more closely, it could be a good moment to widen your watchlist and check out fast growing stocks with high insider ownership.

With Allstate trading around $203.82, showing an 11.79% 1 year total return, an indicated intrinsic discount of 65% and analysts’ targets about 15% higher, you have to ask: is there real value here, or is future growth already priced in?

Most Popular Narrative: 14% Undervalued

With Allstate last closing at $203.82 against a narrative fair value of about $236, the current price sits below what the most followed narrative assumes is justified by future earnings and margins.

The rollout of Allstate's new digitally enabled, "Affordable, Simple, Connected" auto and homeowner products across multiple states, coupled with sophisticated pricing and expanded distribution, is expected to drive profitable policy growth and improve top-line revenue as traditional and direct-to-consumer channels scale. Enhanced use of data analytics, telematics (Drivewise, Arity), and AI-driven underwriting is lowering underwriting and claims expenses, supporting a reduction in loss ratios and bolstering net margins through improved risk selection and operational efficiency.

Read the complete narrative.

Curious how modest revenue growth, thinner margins and a higher future earnings multiple still add up to a higher value today? The narrative leans on a detailed cash flow path, a specific discount rate and an earnings profile that looks very different from recent history. The tension between lower forecast profits and a richer multiple is where the story gets interesting.

In this narrative, analysts link a fair value of roughly $236 per share to Allstate’s expected cash flows, using a discount rate of about 6.96% and a future P/E that sits above today’s level. Those inputs sit alongside assumptions for steady revenue growth, lower profit margins than today and a gradual reduction in the share count, all combining to support a price target that is higher than the current market price but only modestly above it.

Result: Fair Value of $236.05 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that story can unravel if catastrophe losses stay elevated or regulators restrict pricing. This could pressure margins and make those higher future P/E assumptions look stretched.

Find out about the key risks to this Allstate narrative.

Build Your Own Allstate Narrative

If you see the numbers differently or prefer to test your own assumptions, you can build a complete Allstate view in just a few minutes, starting with Do it your way.

A great starting point for your Allstate research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

If Allstate has sharpened your focus, do not stop here. Broaden your opportunity set with a few targeted screens that surface very different types of companies.

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.