What Is American International Group Inc’s (NYSE:AIG) Share Price Doing?
American International Group Inc (NYSE:AIG) received a lot of attention from a substantial price movement on the NYSE in the over the last few months, increasing to $64.8 at one point, and dropping to the lows of $58.11. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether American International Group’s current trading price of $60.47 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at American International Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for American International Group
Is American International Group still cheap?
According to my valuation model, American International Group seems to be fairly priced at around 16.76% below my intrinsic value, which means if you buy American International Group today, you’d be paying a fair price for it. And if you believe the company’s true value is $72.64, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that American International Group’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of American International Group look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of American International Group, it is expected to deliver a relatively unexciting top-line growth of 7.10% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What this means for you:
Are you a shareholder? AIG’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on AIG, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on American International Group. You can find everything you need to know about American International Group in the latest infographic research report. If you are no longer interested in American International Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
