• If you are looking at Apollo Global Management and wondering whether the current share price reflects its true value, you are not alone.
• The stock last closed at US$106.10, after a 3.4% decline over the past week, a 20.8% decline over the last month and a 27.6% decline year to date, compared with a 20.2% decline over the past year and a 93.6% return over three years and 144.7% over five years.
• Recent coverage has focused on how Apollo is positioned within alternative asset management, including its role across credit and private equity, as investors reassess risk across the sector. This context has framed the recent share price moves and raised fresh questions about what is already priced into Apollo's business model.
• Simply Wall St currently gives Apollo a valuation score of 5/6. This suggests it screens as undervalued on most of the checks used. Next, we will look at how different valuation approaches arrive at that view and then finish with an even clearer way to think about what the stock could be worth.

Approach 1: Apollo Global Management Excess Returns Analysis

The Excess Returns model looks at how much profit a company is expected to generate above the return that shareholders require, then capitalizes those excess profits into a per share value today.

For Apollo Global Management, the model starts with a Book Value of US$37.90 per share and a Stable EPS of US$11.36 per share, based on weighted future Return on Equity estimates from 6 analysts. The Average Return on Equity is 18.36%, compared with a Cost of Equity of US$5.20 per share, which implies an Excess Return of US$6.15 per share.

The Stable Book Value used in the model is US$61.85 per share, based on estimates from 3 analysts. By projecting these excess returns on this higher future book value and discounting them back, the Excess Returns model arrives at an estimated intrinsic value of about US$184.83 per share.

Compared with the recent share price of US$106.10, this implies an intrinsic discount of 42.6%. On this approach, Apollo Global Management screens as undervalued.

Result: UNDERVALUED

Our Excess Returns analysis suggests Apollo Global Management is undervalued by 42.6%. Track this in your watchlist or portfolio, or discover 50 more high quality undervalued stocks.

Approach 2: Apollo Global Management Price vs Earnings

For a profitable company like Apollo Global Management, the P/E ratio is a useful shorthand for how much investors are paying for each dollar of earnings. A higher or lower P/E often reflects what the market thinks about the company’s future growth and risk profile, with faster growing or lower risk businesses usually supporting a higher “normal” multiple.

Apollo currently trades on a P/E of 17.51x. That sits close to the Diversified Financial industry average of 17.55x and above the peer group average of 14.14x, so on simple comparisons the stock does not screen as especially cheap or expensive.

Simply Wall St’s Fair Ratio for Apollo is 22.74x. This is a proprietary estimate of what Apollo’s P/E might be, given factors such as its earnings growth profile, industry, profit margins, market cap and specific risks. Because it incorporates these company level characteristics rather than just broad sector averages, the Fair Ratio can offer a more tailored anchor than a straight peer or industry comparison.

Comparing the Fair Ratio of 22.74x with the actual P/E of 17.51x points to the shares trading below that implied level.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Apollo Global Management Narrative

Earlier we mentioned that there is an even better way to think about valuation. On Simply Wall St’s Community page you can use Narratives, which are simple stories that link your view of Apollo Global Management’s business to a set of revenue, earnings and margin forecasts. These are translated into a Fair Value you can compare with the current share price to help you decide whether to buy or sell. Your view is then kept updated automatically as new news or earnings arrive. For example, one investor might build a more cautious Apollo Narrative around a Fair Value near US$124, while another might build a more optimistic Narrative closer to US$193, both using the same company but very different stories behind their numbers.

Do you think there's more to the story for Apollo Global Management? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.