Loews (L): Assessing Valuation After Earnings Growth and Stronger CNA Financial Contribution

Loews (L) has been getting more investor attention lately, and it is not just sentiment. Recent updates show steady revenue and earnings growth, helped by stronger results at majority owned CNA Financial.

See our latest analysis for Loews.

Those solid fundamentals seem to be filtering through to sentiment, with Loews’ recent governance tweaks and legal clarity arriving alongside a strong year to date. The share price return is up sharply while multi year total shareholder returns remain very robust, suggesting momentum is still building rather than fading.

If you like the way Loews has been grinding higher, it could be worth seeing what else fits that profile and exploring fast growing stocks with high insider ownership.

Still, with Loews trading near record highs after years of strong total returns, investors have to ask whether the market is underestimating its future cash generation or already pricing in most of the growth opportunity.

Price to Earnings of 14.8x: Is it justified?

Loews trades on a price to earnings ratio of 14.8 times at a last close of $104.31, which screens as modestly expensive against its peers despite sitting below the broader US market multiple.

The price to earnings ratio compares the current share price to the company’s earnings per share, giving a quick gauge of how much investors are willing to pay for each dollar of profit. For an established insurance and diversified holding company like Loews, this measure is a shorthand for expectations about the stability and growth of earnings over time.

On one hand, Loews looks cheaper than the overall US market, with its 14.8 times multiple below the 19.1 times market average. This hints that investors are not paying a market premium for its earnings stream. On the other hand, our data shows this multiple is richer than both the peer group average of 13.6 times and the wider US insurance industry on 13.4 times. This suggests the market is pricing in relatively stronger or more resilient profits than many insurers.

Compared with the insurance industry, Loews is valued at a clear premium on earnings. If sector sentiment or the company’s performance were to revert toward long-term norms, that gap could narrow over time.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price to Earnings of 14.8x (OVERVALUED)

However, Loews’ premium valuation could unwind if insurance pricing softens, or if its cyclical energy and manufacturing interests face a sharper than expected downturn.

Find out about the key risks to this Loews narrative.

Another View: Our DCF Lens

Our DCF model paints a slightly different picture, suggesting Loews’ fair value sits around $100.29, below the current $104.31 share price. That implies the stock may be mildly overvalued and raises the question of whether recent optimism has run a little ahead of fundamentals.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Loews for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 907 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Loews Narrative

If you see the story differently or want to dig into the numbers yourself, you can shape a custom view in minutes: Do it your way.

A great starting point for your Loews research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

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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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