Author Topic: What is the TRUE Value of American International Group?  (Read 1227 times)

BargainValueHunter

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What is the TRUE Value of American International Group?
« on: December 30, 2010, 04:40:10 PM »
http://www.streetinsider.com/Insiders+Blog/Dear+Bruce%3A+When+Will+the+AIG+Music+End%3F/6185578.html

Quote
While it can be argued that AIG is a cleaned-up company with great assets, including shares in MetLife and AIA, under most metrics the stock price appears overvalued.

Looking at the numbers, it is hard to justify the current share price. Some analysts see AIG earning $1.5-$2.5 billion in 2011. This means the company will earn $0.80 to $1.34 per share in 2011. Rival Travelers (NYSE: TRV) trades at less than 11x 2011 EPS. Applying this multiple to AIG would suggest a price of $8.80-$14.74. Even if you give AIG a massive premium of 20x EPS, this would suggest a price of $17.60-$29.48.
Albert Einstein called compound interest "the greatest mathematical discovery of all time".