American International Group, Inc. (AIG)

Market price: $79.88

4 valuation methods

How each method works

Dividend Discount Model (DDM): $22.34 to $34.06 (midpoint $26.99)

Values the stock as the present value of its expected dividend stream — fitting for stable, dividend-anchored payers like banks, insurers, and utilities.

How it’s calculated
We take the company's dividend and grow it in three stages: three years at the rate its own retained earnings can support (the share of profit it keeps, multiplied by the return it earns on equity), then a seven-year glide down to a long-run rate, and that rate for ever after. The whole stream is discounted back to today at the company's cost of equity. The range comes from flexing that cost of equity.
Why it fits this industry
For mature, dividend-anchored sectors, the dividend is the cash an owner actually receives — valuing that stream directly suits companies whose payout policy is central to the investment case.
Reading this bar
The bar is the per-share value range this method implies: a conservative low, a central estimate, and an optimistic high. If the current price sits below the bar, the market is pricing the shares below what this method's inputs suggest; if it sits above, the market is pricing them higher. No single bar is a verdict — methods disagree for good reasons, so read the whole field together. This bar values only the cash actually paid out. A company that keeps most of its profit is building value the dividend stream does not capture, so its DDM bar tends to sit below the price — the pattern is strongest where the payout ratio is lowest. It is one anchor among several, and for a low payer the earnings-based bars carry more of the story. The long-run rate is the same one the discounted-cash-flow bar uses, so the two do not assume different futures for the same company.

DDM: D₀ 1.14 grown at 4.90% a year for 3y, then eased to 2.50% over 7y and held there, discounted at Ke 7.40%±1.00% => per-share 22.34/26.99/34.06

P / E: $45.09 to $67.35 (midpoint $56.79)

Values the stock at a peer multiple of its earnings per share — the most familiar gauge for steadily profitable companies.

How it’s calculated
We take the company's net earnings per share over the last twelve months and multiply them by the range of price-to-earnings (P/E) multiples its peers trade at.
Why it fits this industry
For steadily profitable companies, earnings are the bottom line an owner is entitled to — P/E is the most familiar way to ask what the market pays for a dollar of profit.
Reading this bar
The bar is the per-share value range this method implies: a conservative low, a central estimate, and an optimistic high. If the current price sits below the bar, the market is pricing the shares below what this method's inputs suggest; if it sits above, the market is pricing them higher. No single bar is a verdict — methods disagree for good reasons, so read the whole field together. One unusually strong or weak year can swing a P/E — the inputs panel shows the earnings the bar is built on.

P / E = (7.95/10.01/11.88)× eps 5.67 ≈ 45.09/56.79/67.35 (per_share)

P / E — operating: $60.48 to $90.16 (midpoint $80.07)

Values an insurer at a peer multiple of operating earnings — net income with investment gains and losses removed, so the multiple prices underwriting rather than markets.

How it’s calculated
We take net income over the last twelve months and remove the investment gains and losses the insurer reported on its portfolio, at the company's own effective tax rate, leaving operating earnings per share. That is multiplied by the range of price-to-operating-earnings multiples comparable insurers trade at.
Why it fits this industry
An insurer's results combine two very different businesses: underwriting policies, which is steady and repeatable, and a large investment portfolio whose gains and losses swing with markets and with the timing of portfolio disposals. Removing the portfolio result leaves the earnings power the sector is normally compared on.
Reading this bar
The bar is the per-share value range this method implies: a conservative low, a central estimate, and an optimistic high. If the current price sits below the bar, the market is pricing the shares below what this method's inputs suggest; if it sits above, the market is pricing them higher. No single bar is a verdict — methods disagree for good reasons, so read the whole field together. The gap between this bar and plain P/E is a measure of how much of recent earnings came from the investment portfolio rather than from underwriting.

P / E — operating = (7.98/10.56/11.90)× operating_eps 7.58 ≈ 60.48/80.07/90.16 (per_share)

P / B: $103.01 to $189.37 (midpoint $138.10)

Values the stock at a peer multiple of its book (net asset) value — most meaningful for asset-heavy and financial companies whose balance sheet drives value.

How it’s calculated
We take book value per share (total assets minus total liabilities, from the latest balance sheet, divided by shares outstanding) and multiply it by the range of price-to-book multiples the peer group trades at.
Why it fits this industry
An insurer's balance sheet — reserves against invested premiums — is the business itself, making price-to-book the sector's anchor comparison.
Reading this bar
The bar is the per-share value range this method implies: a conservative low, a central estimate, and an optimistic high. If the current price sits below the bar, the market is pricing the shares below what this method's inputs suggest; if it sits above, the market is pricing them higher. No single bar is a verdict — methods disagree for good reasons, so read the whole field together. Asset-light companies (brands, software) legitimately trade far above book value, so for them a P/B bar well below the price is usually structure, not signal.

P / B = (1.33/1.78/2.44)× book_value_per_share 77.66 ≈ 103.01/138.10/189.37 (per_share)

4 methods not shown