Buy a euro for 88 cents now? Of course, it sounds suspiciously like a quote from Warren Buffett. The Oracle of Omaha said that to get rich you should buy a dollar at half its value. But it is a statement that can bring out a stock’s inherent value.
In it alliance-The stock (WKN: 840400) I now have this opportunity. So today let’s look at why it’s the metaphorical euro at 88 cents. And of course also why the option is still intact. After all, anyone can simply buy cheap stocks.
Allianz share: buy a euro for 88 cents?
The reason we can buy Allianz shares at the moment as if we were buying one euro at 88 cents has to do with a key figure. A current share price of approximately 174 euros is compared with a book value per share in 2021 of 196 euros. With a price-to-book ratio of 0.88, we get a 12% discount to net asset value. Nevertheless, there can of course be changes. Also because the structured alpha affair should have little impact.
However, I still see so much value that I can discuss this option with the DAX insurance company. So we can also buy a euro for the metaphorical 88 cents because the dividend yield is very high and strong at over 6%. An adjusted price-to-earnings ratio below 10 completes the mix. Despite some construction sites: the DAX insurer is very cheap at the moment and extremely successful, at least in its core business.
We see this above all with a look at the Allianz share and the earnings forecast for the current year 2022. The management expects an operating profit of 13.4 billion euros plus/minus the usual fluctuation billion. It is actually the old top shape we know. Only burdened by special effects.
Based on these solid operating numbers, I also expect Allianz stock to have the potential for further dividend growth. Or with the fact that, according to our own forecast, earnings per share may rise at least in the mid-single digit percentage. Or: That the assumption that we can buy a euro for 88 cents is also operationally supported. Possibly also with more share buybacks due to the currently really cheap valuation.
Great value, small price!
The Allianz share trades below book value. This is the initial starting position and therefore I speak metaphorically that we can buy one euro for 88 cents. But other key figures such as the price-to-earnings ratio or the dividend yield as well as the outlook and the strong operating basis justify this assumption for me. Now you just have to decide for yourself whether you see things the same way.
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Vincent owns shares in Allianz. The Motley Fool does not own any of the stocks listed.