Is American International Group Inc (AIG) overvalued?
On Equity Rank's model estimate, AIG trades 15% below its fair value. American International Group Inc (AIG) last closed at $77.75; the multi-method model fair value is $91.65.
| Price | Model fair value | Price vs model |
|---|---|---|
| $77.75 | $91.65 | 15% below |
What the answer rests on
- 9 of 11 valuation methods put AIG's value above its price and 2 put it below, so the methods mostly agree.
- To justify today's price, AIG's free cash flow would need to grow about -4.3% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew -7.6% a year.
- AIG trades at 13.3 times its last year's earnings, against a median of 13.0 for 75 profitable Insurance companies.
- Over the past year the price sat below the model fair value on 100% of trading days. The gap ranged from 28% below to 2% below the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind AIG's fair value · What prices assume · Other companies