Voya Financial (VOYA) Stock Could Be 30% Undervalued Despite Board No Confidence Push

Voya Financial has delivered a 55.6% share price return over the past 5 years, which puts fresh focus on whether that journey lines up with the returns the business earns on its capital. With an activist challenge now in play, the question for investors is how the current valuation reflects the quality and durability of those returns.

• Over 5 years, Voya Financial's 55.6% return places real weight on the idea that the market is paying close attention to how efficiently the firm turns its capital base into shareholder value.

• The push from TOMS Capital Investment Management for a no confidence vote on the board underlines that capital allocation decisions and execution are front and center, which can influence how investors think about the sustainability of returns on equity and invested capital.

• What if you looked at Voya Financial through its earnings instead? See why Voya Financial's 15.4x P/E tells a different valuation story .

The issue now is whether the current share price around US$96.56 is adequately explained by the level and consistency of returns Voya Financial earns on the capital it deploys.

If you want more ideas built around how well companies turn invested capital into shareholder returns, a focused screener of 26 high quality undervalued stocks can be a useful next step in your research.

Does Voya Financial Look Undervalued on Excess Returns?

The Excess Returns model looks at how effectively Voya Financial turns its equity base into earnings above its estimated cost of capital. For Voya, the inputs point to a business that, on these assumptions, earns more on shareholder funds than the model treats as required.

Book Value is set at $51.72 per share and stable EPS at $8.14 per share, with both figures drawn from weighted estimates by 4 analysts. The model uses an Average Return on Equity of 15.39%, a Cost of Equity of $4.33 per share and an Excess Return of $3.82 per share, with Stable Book Value at $52.91 per share. Those inputs help explain why the Excess Returns projections put Voya Financial's estimated intrinsic value substantially above the current share price of $96.56. Because TOMS Capital is pushing a no confidence vote on the board, the activist challenge may help explain why the market keeps valuing the stock below what these excess return assumptions would support. Find out what Voya Financial could be worth using our Excess Returns estimate .

The Voya Financial Narrative: What Would Justify Today's Price?

Narratives for Voya Financial on Simply Wall St's Community page pick up where the valuation puzzle leaves off and explain what would need to be true on future growth, margins and earnings for the shares to be worth materially more or materially less than today's price. Each scenario links a grounded fair value estimate to a specific mix of potential catalysts and risks so you can track which path the business appears to follow over time.