White Mountains Insurance Group (WTM) Margin Surge And 5x P/E Challenge Bullish Narratives

White Mountains Insurance Group (WTM) capped FY 2025 with Q4 revenue of US$1.6 billion and basic EPS of US$327.23, while trailing 12 month revenue sat at US$3.7 billion and EPS at US$430.14. Over the past few quarters, revenue has ranged from US$577.8 million in Q1 2025 to US$953.6 million in Q3 2024, with EPS moving from a loss of US$50.16 in Q4 2024 to US$44.17, US$47.73 and then US$327.23 through 2025 as profitability and margins shifted across the year. Taken together, these results highlight a year in which earnings power and underwriting profitability were central points of attention for investors.

See our full analysis for White Mountains Insurance Group.

With the headline numbers on the table, the next step is to compare this earnings profile with the widely followed bull and bear narratives around White Mountains and assess where those stories might need updating.

Curious how numbers become stories that shape markets? Explore Community Narratives

29.6% net margin reshapes the story

• Over the last 12 months, White Mountains converted US$3.7b of revenue into US$1.1b of net income, which works out to a 29.6% net profit margin compared with 9.7% in the prior year.
• What stands out for bullish investors is that this high margin sits alongside trailing 12 month EPS of US$430.14, and earnings over that period were described as high quality. However, the big swing in profitability means any bullish case needs to weigh the recent 386.5% earnings growth against the much lower 9.5% annual earnings compounding over five years.
  • The trailing net income of US$1.1b and EPS of US$430.14 line up with a very strong recent period, while the 9.5% five year earnings growth rate points to a steadier profile when you look beyond the latest spike.
  • Bulls who focus mainly on the trailing 29.6% margin risk underplaying how different that is from the prior 9.7% margin and the more moderate long run growth rate.

On these numbers, bullish investors may see a powerful earnings story taking shape, but the gap between the recent 29.6% margin and the prior 9.7% margin makes the trajectory worth studying in more detail. 📊 Read the full White Mountains Insurance Group Consensus Narrative.

Underwriting ratios point to tighter discipline

• Across 2025, the combined ratio moved from 96.5% in Q1 to 84.4% in Q2 and 72.9% in Q3, which lines up with net income rising from US$33.6 million in Q1 to US$121.3 million in Q2 and US$112.3 million in Q3.
• What is notable for bullish thinkers is how these underwriting ratios sit alongside the full year swing in net profit margin from 9.7% to 29.6%. Tighter combined ratios in Q2 and Q3 pair with stronger profitability, yet the 9.5% five year earnings growth rate reminds you that these underwriting results sit on top of a more measured long term earnings record.
  • The Q3 combined ratio of 72.9% comes in alongside US$864.2 million of revenue and US$112.3 million of net income, which is a very different picture to Q1 where a 96.5% combined ratio produced US$577.8 million of revenue and US$33.6 million of net income.
  • When you widen out to the trailing 12 month margin of 29.6%, these quarterly underwriting figures support the idea that better loss and expense ratios have been an important part of the recent earnings strength.

Low 5x P/E versus DCF fair value

• On the trailing 12 month numbers, the shares trade on a P/E of 5x at a price of US$2,185, while the provided DCF fair value is US$1,187.52. This means the share price sits above that DCF estimate even though the P/E is far below the US insurance industry average of 12.9x and peer average of 14.3x.
• What stands out for investors weighing both sides is that the strong recent earnings performance and 29.6% net margin align with a low 5x P/E that can appeal to value focused buyers. However, the DCF fair value of US$1,187.52 being below the current US$2,185 share price adds a counterpoint for more cautious investors who want a margin of safety on estimated cash flows.
  • Compared with the broader US market P/E of 19.3x, the 5x multiple prices White Mountains far lower on trailing earnings even after US$1.1b of net income over the last year.
  • At the same time, the DCF comparison shows the market value above the modelled cash flow estimate, which can lead more conservative investors to focus less on the low multiple and more on whether the recent earnings and margin levels are repeatable.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on White Mountains Insurance Group's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

For all the strength in recent earnings and margins, the current US$2,185 share price, which sits above the US$1,187.52 DCF estimate, may concern value focused investors.

If that gap between price and cash flow estimate makes you cautious, run your eye over our 53 high quality undervalued stocks to quickly focus on companies where the valuation case appears tighter.

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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