Thinking about what to do with your Erie Indemnity shares or pondering if now is the moment to jump in? You are far from alone. This is a company that longtime investors know well, but given its dramatic price swings over recent months, everyone is taking another look. After five years of impressive gains, climbing over 53.8%, 2024 has brought a sharp shift. The last week shows some green, with a 2.5% rise, and the last month is not far behind at 2.7%. However, when looking at the year as a whole, Erie Indemnity is down 25.8% and off 20.7% year to date. That kind of turnaround gets both traders and long-term holders equally curious.
One thing that stands out in the current landscape is the news about regulatory scrutiny in the insurance sector, which has affected investor sentiment toward key players like Erie Indemnity. This development has added a layer of uncertainty and shifted risk perceptions, which may help explain why the stock price has struggled to recover from this year's losses. At yesterday's close of $324.67, it is clear the market is weighing new risks as well as longer-term value.
If you are searching for a quick valuation verdict, the numbers point to caution: Erie Indemnity scores 0 out of 6 checks for being undervalued, which will certainly catch the eye of value-focused investors. But there is more to the story than just the standard metrics. Next, we will examine these key valuation approaches one by one, and later, explore whether there is an even more insightful way to judge what Erie Indemnity is really worth.
Erie Indemnity scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Erie Indemnity Excess Returns Analysis
The Excess Returns model looks at how much value a company creates above its cost of equity by focusing on its return on invested capital. For Erie Indemnity, this approach emphasizes both profitability and capital efficiency, rather than just headline profits or dividends.
Based on the data, Erie Indemnity has a Book Value of $41.78 per share and generates a Stable EPS of $8.53 per share, calculated using the median Return on Equity from the last five years. The company's Cost of Equity stands at $2.15 per share, resulting in an Excess Return of $6.38 per share. The average Return on Equity is an impressive 26.83%, and the Stable Book Value (another five-year median) comes in at $31.80 per share. These figures suggest that Erie Indemnity has a strong history of generating profits well above its capital costs, which is a positive sign for long-term value creation.