What is AXS's Intrinsic value?

AXIS Capital Holdings Ltd (AXS) Intrinsic Value Analysis

Executive Summary

As of December 15, 2025, AXIS Capital Holdings Ltd's estimated intrinsic value ranges from $151.13 to $199.82 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $199.82 +91.5%
Dividend Discount Model (Stable) $151.13 +44.8%

Is AXIS Capital Holdings Ltd (AXS) undervalued or overvalued?

With the current market price at $104.36, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate AXIS Capital Holdings Ltd's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.65 0.77
Cost of equity 6.9% 9.2%
Cost of debt 5.0% 5.0%
Tax rate 8.1% 9.2%
Debt/Equity ratio 0.16 0.16
After-tax WACC 6.5% 8.5%

Valuation Methods

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 17.4%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.0%
  • Long-term growth rate: 0.5%
  • Fair value: $199.82 (91.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.2% (Low) to 6.9% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $101 to $202
  • Selected fair value: $151.13 (44.8% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $8040M
Enterprise Value $8530M
Trailing P/E 7.94
Forward P/E 6.88
Trailing EV/EBITDA 0.00
Current Dividend Yield 219.09%
Dividend Growth Rate (5Y) 1.22%
Debt-to-Equity Ratio 0.16

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Dividend Discount Model (Multi-Stage) 57% $39.96
Dividend Discount Model (Stable) 43% $22.67
Weighted Average 100% $178.95

Investment Conclusion

Based on our comprehensive valuation analysis, AXIS Capital Holdings Ltd's intrinsic value is $178.95, which is approximately 71.5% above the current market price of $104.36.

Key investment considerations:

  • Conservative capital structure (Debt/Equity of 0.16)
  • Historical dividend growth of 1.22%

Given these factors, we believe AXIS Capital Holdings Ltd is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.