Why Voya Financial (VOYA) Is Back In The Spotlight

Voya Financial (VOYA) is back in focus after Washington, DC selected the company as the new service provider for its 401(a) and 457(b) government retirement plans, covering 52,000 accounts and $4.3b in assets.

The Washington, DC mandate lands at a time when momentum in Voya Financial’s stock has been building. The latest share price of $101.16 comes after a 90-day share price return of 24.55% and a year-to-date share price return of 33.81%. The 1-year total shareholder return is 38.08%, suggesting investors have been rewarding the company’s recent execution and contract wins.

See how Voya Financial’s contract win compares by sizing up other retirement and financial services stocks with strong momentum in our curated 20 high quality undiscovered gems list.

For Voya Financial, the recent share price surge and the Washington, DC win could signal a stronger underlying business or a mood shift around the stock. The next step is to examine what the valuation is really implying.

Most Popular Narrative: 4.4% Undervalued

Voya Financial’s most followed narrative places fair value at $105.83 compared with the last close at $101.16. The gap is modest, yet the narrative leans toward undervaluation.

The analysts have a consensus price target of $105.83 for Voya Financial based on their expectations of its future earnings growth, profit margins and other risk factors. In order for you to agree with the analysts, you would need to believe that by 2029, revenues will be $8.5 billion, earnings will come to $1.1 billion, and it would be trading on a PE ratio of 9.4x, assuming you use a discount rate of 7.9%.

Read the complete narrative.

There is a full earnings roadmap behind that $105.83 fair value. Revenue, margins, and profit multiples all need to shift in sync. Curious which assumptions do the heavy lifting and how they connect back to today’s price?

Result: Fair Value of $105.83 (UNDERVALUED)

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

However, you still need to weigh risks such as fee pressure across retirement and asset management, and execution setbacks from acquisitions or integration work that could challenge this Voya Financial narrative.

Find out about the key risks to this Voya Financial narrative.

Another View: What Voya Financial’s P/E Is Telling You

The earlier fair value narrative uses long term earnings forecasts and discount rates. A simpler lens is the P/E ratio. Voya Financial trades at 16.2x earnings, which is far below peers at 60.3x and slightly below the US Diversified Financial industry at 17.7x.

The current P/E also sits just under the 16.6x fair ratio that regression work suggests the market could move toward. That combination of a lower P/E versus peers and only a small gap to the fair ratio points to limited margin of safety but also limited excess optimism. Which side of that trade off do you think matters more for you?

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

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Voya Financial 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 46 high quality undervalued stocks. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

Next Steps

With sentiment on Voya Financial split between opportunity and caution, now is a good time to move fast, review the underlying data, and shape your own view with the 5 key rewards and 1 important warning sign.

Looking for more ideas beyond Voya Financial?

If you stop with Voya Financial, you may miss other opportunities that fit your style. Put a few minutes into scanning fresh ideas that match your risk and return preferences.

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 VOYA.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com