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UBS (SWX:UBSG) Stock Still Looks Cheap Despite Its 201% Run

Simply Wall St · 2d ago

UBS Group has seen its stock post a very strong multi‑year return, and that run now puts a sharper focus on whether the current price matches the returns the bank earns on its capital.

  • Over the past 5 years, UBS Group has delivered a total shareholder return of 201.3%, which puts real weight on the question of how much the business can continue to earn on the equity it employs.
  • Fresh debates in Switzerland about higher common equity tier 1 requirements and the mix between core equity and AT1 instruments may affect how much capital UBS needs to hold, which can influence both its capacity to invest and the future return it generates on that capital base.
  • Prefer to judge UBS Group on earnings? See what UBS Group's 15.3x P/E says about the price.

The stock's next move may depend on whether UBS Group's recent share price level is supported by the returns it earns on its capital today and what investors expect those returns to look like over time.

If you want to stress test UBS Group against other financial stocks where capital strength is a key filter, a focused stock screen is a useful next step via the solid balance sheet and fundamentals stocks screener (200 results)

Is UBS Group Still Cheap on Excess Returns?

The Excess Returns model looks at how much profit UBS Group can generate over and above the cost of its equity base. On the latest inputs, book value is CHF29.12 per share and the stable book value estimate rises to CHF32.71, which signals a balance sheet that analysts expect to keep compounding rather than staying flat. Stable EPS is set at CHF4.47 per share against a cost of equity of CHF1.95 per share, leaving an estimated excess return of CHF2.52 per share.

An average return on equity of 13.66% feeds that spread between what UBS Group is assumed to earn and what shareholders require. This is what drives the Excess Returns valuation outcome to sit substantially above the current CHF39.42 share price. The Swiss debate over higher common equity tier 1 requirements helps explain why the market might still price UBS more cautiously than those excess return assumptions suggest. Find out what UBS Group could be worth using our Excess Returns estimate.

The UBS Group Narrative: What Would Justify Today's Price?

UBS Group's valuation puzzle raises a natural question for Narratives on Simply Wall St's Community page, which spell out what kind of future growth, margins and earnings profile would need to occur for the stock to be worth materially more or less than the current share price. Each scenario links its figures to a clear view of where UBS Group's growth, profitability and key risks might head next, giving you something concrete to revisit as fresh information becomes available.

UBS Group now has investors splitting into two clear camps. One side sees upside, while the other flags regulatory and integration drag.

Bull case: 11% undervalued

"Integration of Credit Suisse and investment in digital infrastructure are enhancing efficiency, scalability, and profitability, boosting margins and long-term earnings potential…"

Discover why this Narrative puts UBS Group at 11% undervalued.

Bear case: 16% overvalued

"The proposed overhaul of Swiss bank capital regulation would require UBS to hold at least $24 billion, and potentially up to $42 billion, in additional capital…"

Explore why this Narrative puts UBS Group at 16% overvalued.

One more UBS Group check that belongs beside the price tag

Valuation only tells part of the story. UBS Group also triggers specific risk checks in Simply Wall St's broader review, and those possible weak spots are worth weighing before leaning too heavily on the upside case. Take a closer look at 4 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.