Voya Financial (VOYA) Stock Could Be Undervalued Despite Its 63% Run

Voya Financial has logged strong share price gains over the past several years, and that kind of run naturally prompts a question about what the business is actually earning on the capital it puts to work. With the stock now around recent highs, investors are increasingly asking whether those returns on capital are enough to support where the valuation sits today.

• Over the past 5 years, Voya Financial has returned 63.3%, which puts real weight on whether the company’s capital returns can keep justifying that kind of long haul performance.
• Activist pressure around governance and capital allocation, alongside Voya’s push to expand areas like pooled employer retirement plans and stop loss insurance, can influence how effectively fresh capital is deployed and what that might mean for future profitability on each new dollar invested.
• If you'd rather focus on earnings, this one's for you. See why Voya Financial's 15.1x P/E tells a different valuation story.

The issue now is whether the returns Voya Financial earns on its capital line up with the current share price or ask investors to accept a thinner margin of safety.

To see how Voya Financial’s capital returns compare with other opportunities using similar criteria, review companies in the 39 high quality undervalued stocks

Is Voya Financial Still Cheap on Excess Returns?

The Excess Returns model looks at how much profit Voya Financial can generate above the cost of its equity capital. Here, the key input is a stable earnings figure of $8.29 per share built on an average Return on Equity of 16.12%, compared with a Book Value base of $42.48 per share that is projected to grow to a Stable Book Value of $51.41 per share. After accounting for a Cost of Equity of $4.21 per share, the analysis points to an Excess Return of $4.07 per share. This is the surplus value creation the model focuses on rather than near term cash swings.

That spread between what Voya Financial is expected to earn and what it needs to earn to justify its equity cost feeds into an estimated intrinsic value that sits substantially above the current share price of $99.01. The activist no confidence campaign from TOMS Capital helps explain why the market may still discount those projected returns, despite the model implying stronger value creation on existing and future equity. To see how that compares with other stocks on similar assumptions, check the full Excess Returns output and peer set in the detailed model view. Find out what Voya Financial could be worth using our Excess Returns estimate.

The Voya Financial Narrative: What Would Justify Today's Price?

Simply Wall St Narratives for Voya Financial pick up where the valuation gap above leaves off. They explain which potential paths for Voya Financial's growth, profitability and earnings would need to occur for the stock to be worth meaningfully more or less than today’s price. Each narrative links its figures to a specific view on where growth, margins and risks go next, which you can revisit on the Community page as new information becomes available.

Community views on Voya Financial are split between those who see underappreciated workplace scale and those focused on margin risk and Stop Loss volatility.

Bull case: 8% undervalued

"The expanding workplace-centric ecosystem, with about 1.3b of combined assets across Retirement and Investment Management and access to more than 50,000 employers and 18 million customers, gives Voya Financial more scope to move retirement participants into wealth and investment products…"

Discover why this Narrative puts Voya Financial at 8% undervalued.

Bear case: 10% overvalued

"Reliance on elevated Stop Loss pricing, including approximately 24% rate increases on the 2026 book, could be difficult to sustain if medical trend moderates…"

Explore why this Narrative puts Voya Financial at 10% overvalued.

One more angle on Voya Financial that could change your view

Valuation only tells part of the story, and Voya Financial also has specific risk checks that the research has flagged which are worth weighing before you get comfortable with the current set up. Take a closer look at 1 warning sign before settling on a valuation.

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