Is It Time To Reconsider Axos Financial (AX) After Its Strong Multi‑Year Share Price Run?
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If you are wondering whether Axos Financial at around US$97 a share is offering fair value or a margin of safety right now, this article walks through what the current market price might be implying.
The stock has been choppy in the short term, with a 3.7% decline over the last 7 days, but it shows a 3.0% return over 30 days, 11.3% year to date and 39.0% over the past year.
Over a 3 year period the share price return stands at 93.6%, and over 5 years it is 115.9%. This gives useful context for anyone trying to judge whether the current price feels stretched or still reasonable. For long term holders or new investors, those figures often raise the question of whether expectations embedded in the price have shifted too far or not far enough.
On our framework, Axos Financial currently has a valuation score of 4 out of 6, based on how its price stacks up against several standard checks for potential undervaluation. Next we will compare outcomes from different valuation approaches, then finish with a way to look beyond the numbers to understand what might really matter for your decision.
The Excess Returns model looks at how much profit Axos Financial may be generating above the return that shareholders might reasonably require, then capitalizes those excess profits into an estimated value per share.
For Axos Financial, the starting point is a Book Value of US$51.70 per share and a Stable EPS estimate of US$11.51 per share, based on the median return on equity from the past 5 years. The model applies a Cost of Equity of US$4.25 per share, which leaves an Excess Return of US$7.25 per share. That excess is then projected on a Stable Book Value of US$60.94 per share, drawn from weighted future book value estimates from 3 analysts, and used to estimate what the stock could be worth if those economics persist.
On this framework, the Excess Returns valuation points to an intrinsic value of about US$264.24 per share. Compared with the current share price around US$97, this implies the stock is roughly 63.2% undervalued on this specific model.
For a consistently profitable company, the P/E ratio is a straightforward way to think about what you are paying for each dollar of earnings. It connects directly to what many investors focus on, which is how much profit the business currently generates.
What counts as a “normal” or “fair” P/E often reflects the balance between growth expectations and risk. Higher expected growth or lower perceived risk can support a higher P/E, while lower growth or higher risk usually points to a lower, more conservative multiple.
Axos Financial currently trades on a P/E of 12.07x. That is close to the Banks industry average of 11.89x, and below the broader peer group average of 24.67x. Simply Wall St’s Fair Ratio for Axos Financial is 14.48x. This Fair Ratio is a proprietary view of what a reasonable P/E could be for this specific company, based on factors such as its earnings profile, industry, profit margins, market cap and risk characteristics, rather than just simple peer or sector comparisons.
Because the Fair Ratio of 14.48x is above the current 12.07x P/E by a clear margin, this framework suggests that Axos Financial appears undervalued on this metric.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, where you spell out your story for Axos Financial in plain language, link it to your own revenue, earnings and margin assumptions, then see what fair value that story implies and how it compares with the current price. Narratives live inside the Simply Wall St Community page, and they are designed so you can quickly connect three pieces that really matter: the business story, a simple forecast, and the resulting fair value. That helps you decide whether Axos Financial looks interesting or not by comparing your Narrative fair value to the live share price, rather than relying only on standard ratios. Narratives also update when new information comes in, for example when Axos reports earnings or there is fresh news that might affect your assumptions. On Axos Financial right now, one Narrative on the Community page might lean toward the higher fair value area around US$111.40, while another might sit closer to the lower analyst target near US$100.17, and seeing that spread helps you decide which story you find more reasonable.
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.
