Is Jackson Financial (JXN) Still Attractive After A 266% Three Year Share Price Jump

• If you are wondering whether Jackson Financial's recent share price puts it in bargain or rich territory, you are not alone. This article is built to help you make sense of what that price might actually represent.
• The stock last closed at US$115.00, with returns of 7.8% over the past week, 16.7% over the past month, 7.0% year to date and 34.5% over the past year, and a very large 3 year gain of 266.1%.
• These moves have kept Jackson Financial on many investors' watchlists, with recent coverage focusing on its position in the US diversified financials space and how its stock performance compares with peers. Commentators have also been discussing how its capital return framework and balance sheet strength factor into investor sentiment, which helps frame the recent price action without relying only on short term headlines.
• On our checks, Jackson Financial has a valuation score of 4/6, suggesting several areas where it screens as undervalued. Next, we will walk through the key valuation approaches investors often use and then finish with a more complete way to think about what the stock might be worth.

Jackson Financial delivered 34.5% returns over the last year. See how this stacks up to the rest of the Diversified Financial industry.

Approach 1: Jackson Financial Excess Returns Analysis

The Excess Returns model looks at how much profit a company can generate above the return that equity investors typically require, then adds the value of those extra profits to the underlying book value of the business.

For Jackson Financial, the model uses a Book Value of US$141.89 per share and a Stable EPS of US$11.94 per share, based on the median return on equity from the past 5 years. The Average Return on Equity is 9.49%, while the Cost of Equity is US$9.50 per share. This leads to an estimated Excess Return of US$2.43 per share. The Stable Book Value input of US$125.76 per share comes from the median book value over the same period.

When these inputs are combined in the Excess Returns framework, the resulting intrinsic value estimate is US$182.39 per share. Compared with the recent share price of US$115.00, this implies the stock is 36.9% undervalued based on this specific model and its assumptions.

Result: UNDERVALUED

Our Excess Returns analysis suggests Jackson Financial is undervalued by 36.9%. Track this in your watchlist or portfolio, or discover 884 more undervalued stocks based on cash flows.

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

Approach 2: Jackson Financial Price vs Earnings

For a profitable company like Jackson Financial, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. This is often more meaningful than looking at revenue or book value alone.

In general, higher growth expectations and lower perceived risk can support a higher P/E ratio. Slower expected growth or higher risk tend to line up with a lower, more cautious multiple. That is why a single “normal” P/E can vary a lot from one company or industry to another.

Jackson Financial currently trades on a P/E of 14.69x. This sits slightly above the Diversified Financial industry average of 14.20x and a bit below the peer group average of 15.28x. Simply Wall St also calculates a proprietary “Fair Ratio” of 16.70x for Jackson Financial, which reflects factors such as its earnings profile, industry, profit margins, market cap and specific risks.

This Fair Ratio is designed to be more tailored than a simple comparison with peers or the broad industry because it incorporates the company’s own fundamentals rather than assuming every diversified financial stock should share the same P/E.

Since the Fair Ratio of 16.70x is higher than the current P/E of 14.69x by more than 0.10, this framework points to the shares trading at a discount on this metric.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Jackson Financial Narrative

Earlier we mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you attach your own story to Jackson Financial’s numbers by linking what you think about its business, future revenue, earnings and margins to a clear forecast and Fair Value. This sits on the Community page, updates automatically when news or earnings land, and helps you compare that Fair Value to today’s price so you can decide what timing makes sense for you, whether you lean closer to the more optimistic US$118 view or the more cautious US$95 view that analysts currently publish for the stock.

Do you think there's more to the story for Jackson Financial? 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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