Valuation debates sharpen for major US stocks

Mixed valuation signals for Apple after share price pullback

Apple’s recent share price weakness has triggered renewed scrutiny of its valuation, with differing models pointing to both overvaluation and undervaluation. The stock recently closed at US$255.53 and has declined 1.5% over seven days, 6.6% over 30 days and 5.7% year to date, while still delivering an 11.6% return over one year and around 88% over both three and five years.

A Discounted Cash Flow model using a two‑stage Free Cash Flow to Equity approach estimates Apple’s intrinsic value at about US$226.16 per share, implying the shares may be roughly 13.0% overvalued. That model draws on current free cash flow of about US$99.9 billion and projected free cash flow of US$184.1 billion in 2030, discounting those cash flows back to reflect timing and risk.

By contrast, a price‑earnings lens suggests the shares may be inexpensive relative to Apple’s earnings profile. The company trades on a P/E of 33.53x, above the tech industry average of 22.89x and slightly above a 32.47x peer group average. However, Simply Wall St’s proprietary “Fair Ratio” for Apple is 37.31x, indicating the current multiple sits below what that method considers reasonable given Apple’s growth, margins, size and risks.

These differing views are reflected in investor “Narratives” that map assumptions to implied fair values. One bull case cites factors such as artificial intelligence initiatives, record services revenue of US$26.3 billion in Q1 2025 and strong profitability, supporting a higher fair value in the US$275 per share range. A bear case instead emphasizes margin pressure, supply chain issues, competition and Apple’s dependence on China, with a fair value closer to US$177 per share.

Goldman Sachs momentum questions and valuation gap

Goldman Sachs Group is also under valuation review following substantial multi‑period share price gains. The stock recently traded around US$962.0, down 1.4% on the day but up 2.5% over the past week, 7.7% over the past month, 26% over three months and 56.8% over the past year, with a very strong five‑year total shareholder return.

At this level the shares sit above an analyst target of US$930.55 and well above a community narrative fair value of about US$813.47, which frames Goldman as roughly 18.3% overvalued. That narrative assumes record growth and momentum in Asset & Wealth Management, with 30 consecutive quarters of strong fee‑based net inflows and rising demand for alternative assets from high‑net‑worth and institutional clients, shifting the business mix toward less volatile, higher‑margin earnings streams.

Those assumptions support expectations of steady top‑line expansion, firmer profitability and a richer future earnings multiple, evaluated using a 12.5% discount rate. The recent price moves near US$962.0 suggest investors are reassessing how much of that growth and margin profile is already embedded in the valuation.

Everest Group seen as undervalued after weak run

Everest Group has drawn attention after a period of softer share performance. At a share price of US$318.81, the company has logged a 7‑day return of a 4.31% decline and a 30‑day return of a 3.77% decline, alongside a year‑to‑date loss and a 1‑year total shareholder return decline of 9.87%. Over five years, however, total shareholder return remains positive at 55.19%.

The most followed narrative places Everest’s fair value at about US$369.73 per share, roughly 13.8% above the latest close, indicating perceived undervaluation based on growth and margin assumptions. That view highlights the company’s expansion into international and specialty insurance lines such as engineering, renewable energy, marine and accident, tying double‑digit premium growth to expectations of sustained long‑term revenue and earnings growth.

A separate Simply Wall St DCF model generates a far higher fair value estimate of about US$1,367.10 per share, implying the stock trades roughly 76.7% below that level. Both perspectives depend on catastrophe losses and reserve trends remaining manageable, with any severe event or adverse reserve development identified as a key risk to the earnings narrative.

Contrasting narratives for ManpowerGroup and PennyMac

ManpowerGroup and PennyMac Mortgage Investment Trust illustrate how analyst and investor narratives diverge when outlooks are uncertain. For ManpowerGroup, a BMO Capital upgrade followed by a UBS price target cut has brought margins and labor‑market sensitivity into focus. The stock’s one‑year total shareholder return has fallen 47.29%, with a three‑year decline of 61.47% and a 90‑day share price drop of 11.38%, despite a recent close of US$30.07 that is roughly flat year to date.

The most popular ManpowerGroup narrative points to a fair value of about US$40.33, around 25.4% above the recent price and below a US$49.0 consensus analyst target. Price targets span from US$39.0 to US$55.0, reflecting disagreement over how revenue, margins and earnings will “reset,” while risks cited include weaker Northern European operations and rising technology‑based competition.

For PennyMac Mortgage Investment Trust, AI‑driven trading models have flagged a technical breakout at a time when institutional investors are adjusting risk hedging and mortgage‑backed securities exposure amid volatile interest rates. The trust offers a double‑digit dividend yield, and its board has repeatedly affirmed a US$0.40 quarterly dividend for 2025, foregrounding questions about income durability and the sustainability of payouts under funding and spread pressure.

PennyMac’s narrative projects revenue of US$354.4 million and earnings of US$194.9 million by 2028, implying a 16.8% annual revenue decline but an earnings increase of about US$132 million from US$62.9 million today. A community fair value view suggests around 3% downside from the current price, while other estimates between roughly US$8.11 and US$14 per share underline how widely opinions differ given ongoing interest‑rate and spread volatility.