IAG Stock Rose 31% in 90 Days: Here’s Why it’s Still Undervalued

When it comes to strong performers, iA Financial (TSX:IAG) shooting up 31% over the past three months. This surge can be attributed to its solid earnings and positive market sentiment toward the insurance sector. However, if you’re wondering if it’s still undervalued, it’s worth looking at its price-to-earnings ratio and comparing it with industry peers. Keep in mind the broader market conditions and any upcoming earnings reports. These could either push it higher or bring it back down to earth. So, what’s pushing this company into the future?

About IAG

IAG stock is one of the major players in the Canadian insurance and wealth management space, offering everything from life insurance to savings plans and investment products. It’s been around for over a century, making it a solid and trusted name in the industry. Recently, IAG stock has caught the attention of investors thanks to its steady performance, good dividends, and strong management team. This has navigated the company through some volatile markets with ease.

What makes IAG stock particularly interesting is its diversified business model. Not only is it big on insurance. It also has a growing presence in wealth management, giving it multiple streams of income. If you’re thinking about investing, it’s a company that’s shown resilience and growth potential. Just keep an eye on economic factors that could impact the insurance sector and broader financial markets. If it continues to grow the wealth management segment, that could be a key driver of future stock performance.

Let’s compare

When you compare IAG stock to its industry peers, like SunLife or Manulifeit may not have the same global recognition, but it’s certainly holding its own in the Canadian market. While Sun Life and Manulife have a larger international footprint, IAG focuses more on North America, particularly in Canada, giving it a strong, stable presence at home. This localized focus allows IAG to really understand and cater to Canadian consumers’ needs, thus making it a trusted brand in the insurance and wealth management sectors.

On the flip side, IAGIAG stock might not have the same massive scale or diversification as its larger competitors, which can offer more products and services worldwide. However, this can also be a benefit. IAG’s smaller size allows it to be a bit more nimble and responsive to market changes. So, while it may not be the giant in the room, it’s definitely proving to be a solid option for investors looking for growth and stability, especially if you’re focused on the Canadian market.

Still valuable

IAG stock looks pretty appealing from a valuation standpoint. Its forward price-to-earnings (P/E) ratio of 9.61 is significantly lower than its trailing P/E of 15.01, suggesting that analysts expect its earnings to improve in the coming quarters. This forward P/E is also lower compared to many of its industry peers. This could indicate that IAG stock is undervalued, especially considering its strong recent stock performance. With a price-to-book ratio of 1.60, it’s trading at a reasonable level relative to its assets. This adds to its attractiveness as a potential value play.

That said, while it may look undervalued on the surface, there are a few things to consider. IAG’s profitability metrics, such as a return on equity of 10.51%, are solid but not necessarily market-leading. It’s also worth noting that its debt-to-equity ratio of 46.39% isn’t high. Overall, IAG stock seems like a well-positioned stock with room for growth. Yet, like any investment, it’s important to keep an eye on broader market conditions and upcoming earnings reports.