Azimut Holding has delivered a strong share price run over the past few years, which puts a spotlight on what kind of returns the business is actually earning on the capital it deploys. With the stock now reflecting that track record, the immediate question is whether those returns are enough to justify where the price sits today.

• Over the past 3 years the share price has gained 106.6%, which raises the issue of whether Azimut Holding's return on capital is strong enough to support such a step up in investor expectations.

• The group depends on how effectively it turns client assets and fee income into profit and free cash flow, so the efficiency of that capital use may be a key driver of what investors should be prepared to pay.

• If you'd rather focus on earnings, this one's for you. See what Azimut Holding's 9.3x P/E says about the price .

For investors, the debate is whether the returns Azimut Holding earns on its capital stack up well enough against the current share price to keep justifying this track record.

To pressure test whether Azimut Holding's recent 3 year gain of 106.6% is exceptional or closer to the pack, line it up against 196 high quality undervalued stocks .

Does Azimut Holding Look Undervalued on Excess Returns?

The Excess Returns model examines what Azimut Holding earns on its equity after covering the cost of that equity, and then compares those surplus profits with what you are paying at €34.28 per share.

For Azimut Holding, the inputs suggest a business earning more than its equity charge on a per share basis. Book value is €13.92 per share and stable EPS is €4.04 per share, against a cost of equity of €1.60 per share. That leaves an excess return of €2.43 per share, built on an average return on equity of 24.32%. Stable book value is projected at €16.60 per share, so the model assumes the equity base keeps compounding rather than stalling.

The Excess Returns approach then discounts those surplus earnings back to today and compares the result to the market price. In this case, the projections put Azimut Holding's estimated intrinsic value substantially above the current share price. Find out what Azimut Holding could be worth using our Excess Returns estimate .

The Azimut Holding Narrative: What Would Justify Today's Price?

Narratives pick up where the Azimut Holding valuation puzzle leaves off and spell out which future growth, profitability and earnings paths would need to play out for the stock to be worth meaningfully more or less than today. Each scenario sets out the assumptions that sit behind its view of fair value, so you can weigh those inputs against Azimut Holding's actual results as new numbers come through on Simply Wall St's Community page.