Everest Group Shares: A Deep Value Play or Priced for Perfection?

NEW YORK – Shares of Everest Group (NYSE: EG), the global insurance and reinsurance provider, have shown notable weakness over the past year, declining 4.1%. This dip has investors questioning whether the market is overlooking intrinsic value or correctly pricing in emerging risks. A close examination of the fundamentals reveals a stark divide between valuation methods.

Simply Wall St’s Excess Returns Model, which capitalizes earnings above the cost of equity, paints a compelling picture. Using analyst estimates for book value and return on equity, the model calculates an intrinsic value of approximately $1,362.17 per share. Compared to yesterday's closing price of $329.62, this suggests the stock is undervalued by a staggering 75.8%.

"The model implies the market is pricing in a permanent deterioration in profitability that the current analyst estimates simply don't support," noted a market analyst familiar with the methodology. "It's a classic value signal."

However, the price-to-earnings (P/E) ratio provides a counter-narrative. Trading at 25.30x earnings, Everest Group commands a significant premium to both the broader insurance industry average (12.82x) and a peer group average (14.66x). This premium, while substantial, aligns closely with Simply Wall St's proprietary "Fair Ratio" of 25.76x, which adjusts for company-specific factors like growth profile and risk.

"The P/E tells us the market is already paying up for quality and stability," the analyst added. "The question is whether future earnings can grow into that multiple or if it's simply too rich."

The divergence highlights the tension in today's market: deep-value models clash with relative valuation metrics. For active investors, tools like Simply Wall St's "Narratives" allow users to test different growth and margin scenarios, linking a business thesis directly to a fair value estimate.

Market Voices:

• David Chen, Portfolio Manager at Horizon Capital: "The Excess Returns model is flashing a bright green light. In a sector often driven by cyclical fears, this level of implied undervaluation is rare for a firm with Everest's underwriting discipline and balance sheet strength. This is a patient investor's opportunity."
• Rebecca Shaw, Independent Insurance Analyst: "While the model is mathematically sound, it's overly reliant on long-term analyst forecasts, which are notoriously optimistic. The premium P/E is the market's real-time verdict, reflecting concerns over catastrophic loss trends and investment income pressure. The stock isn't cheap for a reason."
• Marcus Johnson, Retail Investor: "This is exactly why I get frustrated with Wall Street. One minute a stock is 'undervalued by 76%,' the next its P/E is 'about right.' Which is it? It feels like the models are just designed to keep us confused and trading. Maybe the truth is somewhere in the middle, but the analysts never want to give you a straight answer."
• Anita Desai, CFA, University Finance Lecturer: "The contrasting results are a perfect teaching moment. The Excess Returns model is an absolute valuation tool, sensitive to long-term inputs. The P/E is a relative, market-based metric. Everest Group's situation suggests the market has lower confidence in those long-term earnings projections than the analysts do. Investors must decide which lens they trust more."

Disclosure: This analysis is based on historical data and analyst forecasts using an unbiased methodology from Simply Wall St. It is not financial advice and does not constitute a recommendation. Simply Wall St has no position in any stocks mentioned.