RGA (RGA) Earnings Growth Of 64.9% Tests Valuation And Margin Narratives

Reinsurance Group of America (RGA) closed out FY 2025 with fourth quarter revenue of US$6.6b and basic EPS of US$7.06, capping a trailing twelve month period where EPS reached US$17.94 on revenue of US$23.7b. Over the past year, the company has seen revenue move from US$22.1b to US$23.7b on a trailing basis, while net income excluding extra items shifted from US$717m to US$1.2b. This sets up a picture of earnings growth that sits alongside a trailing net margin of 5% and a market price of US$225.36.

See our full analysis for Reinsurance Group of America.

With the headline numbers on the table, the next step is to line these results up against the widely shared narratives around RGA and see where the story of its margins and growth outlook is confirmed or challenged.

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

64.9% earnings growth and 5% margin in context

• On a trailing basis, RGA generated US$1.2b of net income excluding extra items and US$23.7b of revenue, which lines up with 64.9% year over year earnings growth and a 5% net margin compared with 3.2% last year.
• What supports a bullish view is that higher earnings growth sits alongside a 5% margin and US$17.94 of trailing EPS. Investors still have to weigh that against revenue growth forecasts of about 7.5% per year, which are below the cited 10.2% US market benchmark.
  • Supporters of the bullish angle can point to five year annualized earnings growth of 8.8% and the recent 64.9% yearly jump, which both align with the forecast of roughly 14.84% annual earnings growth.
  • The tension for that bullish angle is that, even with the 5% margin and higher earnings base, revenue projections are more modest than the broader US market reference, so a lot of the story rests on profitability rather than top line expansion.

Over the past year RGA’s earnings profile has shifted meaningfully, and the numbers behind that shift are what bullish and cautious investors are both dissecting. 📊 Read the full Reinsurance Group of America Consensus Narrative.

Valuation gap versus DCF and P/E peers

• Shares trade at US$225.36 with a trailing P/E of 12.5x, compared with a peer average of 10x and a US Insurance industry average of 12.9x. An internal DCF fair value of about US$711.01 signals a very large gap between price and that model based estimate.
• What is interesting for bullish investors is that the DCF fair value of US$711.01 suggests large modeled upside from US$225.36. At the same time, the current 12.5x P/E is already above the 10x peer average, which means the bullish story leans heavily on the idea that RGA’s 5% margin and earnings growth justify paying more than many direct peers.
  • Supporters of the bullish view can highlight the combination of US$1.2b in trailing net income, 64.9% earnings growth and the DCF fair value estimate that is about 3x the current share price as signals that the business fundamentals may not be fully reflected in the market price.
  • On the other hand, critics of a straightforward bullish read can point to the peer comparison, where a 12.5x P/E already sits above the 10x average, which suggests some premium is recognized even though the price is still well below the DCF fair value estimate.

Dividend yield alongside earnings and revenue forecasts

• RGA currently offers a 1.65% dividend yield on a share price of US$225.36, which sits next to trailing EPS of US$17.94, a 5% net margin and forecast earnings growth of about 14.84% per year with revenue forecast around 7.5% per year.
• For investors looking at a more cautious angle, the combination of a 1.65% yield and revenue growth forecasts below the cited 10.2% US market benchmark can raise the question of how much of the future return story depends on the company keeping that 5% margin and the forecast earnings growth on track rather than on income or faster sales growth.
  • Cautious investors can highlight that while the yield and margin provide support, the comparatively lower revenue growth forecast means the income component currently looks modest compared with some higher yielding insurers or other income focused options.
  • At the same time, the forecast gap between earnings growth of about 14.84% and revenue growth of about 7.5% emphasizes how much of the thesis is tied to profitability metrics staying where they are or improving rather than to rapid expansion of the top line.

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 Reinsurance Group of America'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

RGA’s story leans heavily on margins and earnings forecasts, while revenue growth sits below the cited US market benchmark and the dividend yield remains relatively modest.

If you want ideas where valuation is the potential upside rather than a concern, take a few minutes to scan our 53 high quality undervalued stocks identified by the screener.

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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