ICG (LSE:ICG) Stock Could Be 39% Undervalued On Excess Returns

ICG has delivered a 48.5% return over the past 3 years, which puts the spotlight firmly on whether the current share price is properly supported by the returns the business earns on its capital. With the stock closing at £18.55, the key issue now is how those underlying economics line up with what the market is willing to pay.

• A 48.5% gain over 3 years puts meaningful weight on the question of whether ICG's current share price is adequately backed by the returns it produces on the funds it reinvests.
• The group's investment model, which depends on how effectively it allocates capital and recycles cash from deals, can directly influence both future return on capital and how durable any premium in the share price might prove.
• If you'd rather focus on earnings, this one's for you. See what ICG's 10.6x P/E says about the price.

For investors, the debate is whether ICG's recent share performance is fully explained by the returns it earns on its capital or whether the price now assumes something more.

If you are questioning whether ICG’s 48.5% three year return is well supported by the business, it can help to compare it with companies filtered through 12 high quality undervalued stocks.

Does ICG Look Undervalued on Excess Returns?

The Excess Returns model evaluates how much value ICG can create above the cost of equity on its existing and future book of assets. The key factors are the expected profitability on shareholder funds and how that compares with what investors require in return for their capital.

ICG is modelled with a Book Value of £9.53 per share and a Stable Book Value of £11.08 per share, with analysts expecting Stable EPS of £2.00 per share. Against a Cost of Equity of £0.98 per share, the Excess Return of £1.02 per share implies that each pound of equity is forecast to earn more than it costs. An average Return on Equity of 18.06% underpins those assumptions, which helps explain why the Excess Returns projections put the company’s estimated intrinsic value substantially above the current share price of £18.55. Find out what ICG could be worth using our Excess Returns estimate.

The ICG Narrative: What Would Justify Today's Price?

Narratives for ICG pick up where the valuation puzzle leaves off and describe what would need to happen to growth, margins and earnings for the stock to be worth substantially more or less than today’s price. These details are all set out on Simply Wall St’s Community page.

Instead of a single number from a ratio or model, Narratives outline the future path that number relies on so you can see over time whether reality tracks the assumptions or starts to drift.

One of the top community narratives on ICG: roughly fairly valued

"ICG manages private markets strategies across credit, secondaries, structured capital and real assets for institutional and wealth clients globally…"

Discover why this Narrative puts ICG at roughly fairly valued.

ICG’s share price is only one piece of the decision

The returns story says a lot about ICG, but the real steering wheel sits with the people running it and how their rewards line up with your interests. See who runs ICG and how they are paid.

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