ALLSTATE CORP (ALL): what the price requires

At today's price, ALLSTATE CORP (ALL) is priced for 14.4% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/ALL

Headline

FieldValue
TickerALL
CompanyALLSTATE CORP
Current price$255.66/sh
CompositionAllstate Protection 94% / Protection Services 6%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfinancials
Return on equity needed14.4%
Return on equity now35.5%
ROE gap-21.1pp
Price-to-book2.22x

Solve inputs: computed at a 8.7% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~2.2pp.

How unusual the bet is: within-range

ReferenceValue
vs own history+0.50σ
cohort percentile (of 80 peers)64
sustained it ~10 years at this level62%
implied end-window share0%

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset0.51x3justifies
Earnings0.35x2justifies
Relative0.47x3justifies
Growth1.34x1expensive

Families that justify the price: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.

Per-Model Detail (n=9)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
Bank Fair Value (P/TBV)—$850.780.30xyesTBVPS $108.56 × 7.84x (ROE (TTM) 38.3% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption))
Relative ValuationRelative$529.870.48xyesP/E 11x (static sector reference · 2026-04), scenarios: 9.3x / 11.0x / 12.7x (bear / base = reference held flat / bull), EV/EBITDA 10x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$498.750.51xyesBV/sh $120.44, ROE (TTM) 38.3%, ke 9.3%
Two-Stage Excess ReturnAsset$1112.420.23xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$191.501.34xyesRev $68.2B, growth 4% (input: historical growth; tapered), Terminal P/S: 0.8x / 1.0x / 1.1x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$543.960.47xyesEPS $45.33, growth 2% (input: historical EPS growth), PEG=2.77 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset$350.480.73xyes√(22.5 × EPS $45.33 × BVPS $120.44) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$1462.650.17xyesEPS $45.33 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative——no—
PEG Fair ValueRelative$1699.870.15xyesEPS $45.33 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$490.050.52xyesEPS $45.33 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Share count CAGR (buyback)-1.7%

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

Bull Case

Valuing a property-casualty insurer is unusually clean when the underwriting is working, because the entire business reduces to one ratio. The combined ratio is the sum of claims and expenses divided by premiums earned; below 100 the company makes money insuring before it earns a cent on its investments. Allstate's property-liability combined ratio came in at 82.0 in the first quarter of 2026, down from 97.4 a year earlier, and the underlying ratio, which strips out catastrophes and reserve changes to show the run-rate, improved to 80.3 from 83.1. That is not a one-quarter fluke driven by quiet weather alone; the underlying improvement says the book is priced to profit. The filing frames the discipline directly: catastrophe exposure is managed "with the goal of providing shareholders an acceptable return on the risks assumed, managing variability of earnings".

The auto franchise, Allstate's core, is both more profitable and growing again. The recorded auto combined ratio improved to 81.9 from 91.3, and policies in force grew 2.6% to 25.8 million with new business up 9.4%. Growing the book while the book is this profitable is the combination insurers rarely get; usually a company either holds margin by shedding policies or grows by underpricing. Allstate is doing both at once, which is what a successful rate-and-then-grow cycle looks like after the painful re-pricing of the prior two years.

What the bull ultimately owns here is return on equity at a value price. The company is earning a return on its equity in the high-30s percent on a trailing basis, far above the high-teens a strong insurer sustains across a cycle, and yet the stock trades at about 1.9 times book value and under 9 times earnings. The capital-return engine reflects that surplus: the share count has been falling about 1.7% a year, which is buybacks deployed where they cannot be faked, on top of the dividend. A company earning well above its cost of capital, growing its core, and returning capital, priced near book-plus, is the rare insurer where profitability and a cheap multiple sit in the same name.

Bear Case

The bear case is about erosion of the advantage that built Allstate, not about the current numbers, which are plainly strong. Allstate grew on a captive and exclusive-agent distribution model, and that model is being competed away by direct sellers and telematics-priced rivals who acquire customers online at lower cost and segment risk with driving data. The filing concedes the pressure in its own pricing discussion, noting that its ability to "adequately and effectively price and personalize products is affected by the evolving nature of consumer needs and preferences, market and regulatory dynamics, broader use of telematics-based rate segmentation". When the basis of competition shifts from agent relationships to data and digital acquisition, an incumbent with a legacy cost structure has to spend to keep up, and that spend is a tax on the very margins that look so good today.

The deeper structural risk is that the current combined ratio is close to the top of what this business can earn, not a new normal. The 82.0 ratio benefited from catastrophe losses falling 43.7% to $1.24 billion, and a sizable piece of the auto improvement came from prior-year reserve releases rather than current underwriting. Reserve releases are non-recurring by nature, and the catastrophe relief is weather, which does not stay benign. The filing is explicit that the company "may incur catastrophe losses greater than" those "experienced in prior years", "the expected level used in pricing", or "current reinsurance coverage limits". A single severe storm season can move the combined ratio back above the level where underwriting profit disappears.

This is where the price actually makes sense as a warning rather than a bargain. The valuation lenses almost all sit above the current price, which usually signals a cheap stock, but for a peak-cycle insurer the cheap multiple is the market pricing mean reversion. The price requires a return on equity of only about 13% to justify it, well below the high-30s the company earns now, precisely because the market does not expect today's combined ratio and today's return to persist. The bear is not that Allstate is overvalued on current earnings; it is that current earnings are the cyclical high, the moat is under quiet erosion from direct and data-driven competitors, and the normalized return that the price implicitly assumes is the honest one to underwrite.

Valuation

An insurer is worth the return it earns on its capital, so the right anchor for Allstate is return on equity against book value, not an operating multiple. At $220.85 (June 27, 2026) the stock trades at about 1.9 times book value, with book around $120 a share, and at under 9 times trailing earnings of roughly $45 a share. Set against a trailing return on equity in the high-30s percent, that is a strikingly low multiple, and the reason is in the inversion: the price requires a return on equity of only about 13% to be justified, a level the company has cleared by a wide margin recently. The market, in other words, is paying for a normalized insurer return, not the peak-cycle return Allstate is currently posting.

The methods we use to triangulate nearly all land above the price, which is the unusual signature of a value-supported financial rather than a growth bet. The book-value-plus-profitability lens, which capitalizes the spread between the return on equity and the cost of equity, lands far above the price because that spread is currently enormous. The peer-multiple lens, on a blended earnings multiple against the property-casualty sector, also lands above the price. Only the forward-growth lens lands below, near $165, because Allstate's revenue grows in the low single digits and a growth-priced method has little to credit. The pattern is the inverse of a momentum name: the static, value-oriented methods all say supported, and only the growth method finds it expensive. That tells the buyer this is a value-and-capital-return story, not a compounding-growth story, and it should be underwritten as one.

Solvency for an insurer is read on capital adequacy and payout capacity, not net debt and coverage, because the balance sheet is funded by policyholder float rather than corporate borrowing. On that frame Allstate is in a strong position: it is returning capital through both a falling share count, down about 1.7% a year, and a dividend, which is only possible when regulatory capital comfortably exceeds requirements. The single qualifier on the downside is the one the bear names: the capital-return capacity rests on the combined ratio staying low, and a severe catastrophe year would pressure both earnings and the surplus that funds buybacks. The valuation already embeds a discount for that risk, which is why the multiple is low while the current return is high.

Catalysts

Allstate's first quarter of 2026 was a standout on profitability. Revenues were $16.9 billion, net income was $2.4 billion, and adjusted net income reached $2.8 billion, or $10.65 per diluted share. The engine was underwriting: the property-liability combined ratio fell to 82.0 from 97.4, helped by catastrophe losses dropping 43.7% to $1.24 billion, while the underlying combined ratio improved to 80.3 from 83.1, showing the gain was not only weather.

The auto book, which is the heart of the company, both improved and grew. The recorded auto combined ratio fell to 81.9 from 91.3, helped by prior-year reserve releases, and the underlying auto ratio improved to 89.5 from 91.2; policies in force grew 2.6% to 25.8 million with new business up 9.4%. The next earnings print matters most for two readings: whether the underlying combined ratio holds as reserve releases fade, and what the catastrophe season does to the headline ratio. Profitability this strong sets a high bar, so the watch is less on whether Allstate makes money and more on how much of this quarter's level proves repeatable.

Peer Cohorts (Per Segment, With Filing Citations)

Allstate Protection (reported)

Protection Services (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 FY2026 earnings release

View the full interactive ALL report on boothcheck