Assessing Great-West Lifeco (TSX:GWO) Valuation After Mixed Recent Returns And Strong Long Term Performance

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Great-West Lifeco (TSX:GWO) is back in focus as investors reassess its recent share performance, with mixed short term returns contrasted against stronger multi year total returns and solid reported revenue and net income figures.

See our latest analysis for Great-West Lifeco.

At around CA$63.84, the recent 7 day share price return of 3.33% contrasts with a weaker year to date share price return of a 4.86% decline. At the same time, the 5 year total shareholder return of 152.92% points to a longer term compounding story that short term pullbacks have not erased.

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With revenue of CA$35.45b, net income of CA$3.96b and a 5 year total return above 150%, plus a model based intrinsic value gap, the key question is simple: is Great West Lifeco still mispriced or is the market already baking in future growth?

With Great-West Lifeco’s last close at CA$63.84 and the most followed fair value estimate sitting around CA$67.08, the current pricing gap has caught attention and sets up a clear valuation debate.

The Fair Value Estimate has edged higher from about CA$66.17 to roughly CA$67.08, a move of around CA$0.92 per share.

Read the complete narrative.

Want to see why a higher earnings multiple is baked into this fair value? The whole narrative leans on measured revenue growth, resilient margins, and a richer future valuation that is anything but random.

Result: Fair Value of CA$67.08 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, that higher earnings multiple could be challenged if fee compression bites into revenue or if heavy digital spending fails to deliver the expected efficiency gains.

Find out about the key risks to this Great-West Lifeco narrative.

Our SWS DCF model suggests Great-West Lifeco at CA$63.84 is trading at a large discount to an estimated future cash flow value of CA$143.09. This implies the shares look undervalued on this lens, especially compared with the more modest 4.8% gap from the narrative fair value. Which anchor do you treat as more realistic?

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

If the mixed signals in this article leave you undecided, take a closer look at the underlying data and form your own opinion. Then check out 3 key rewards.

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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.

Companies discussed in this article include GWO.TO.

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