Are Phoenix Group shares a FTSE 100 bargain? Here’s what the charts say!

Could Phoenix Group be considered one of the FTSE 100’s best cheap stocks? Our writer Royston Wild runs the rule over the pensions giant.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The FTSE 100 is on a roll right now. At around 7,900 points, the UK’s premier share index is within a whisker of hitting new highs. And as market confidence steadily builds, a barge through this level looks inevitable.

Yet despite this strength, the Footsie is still jam-packed with brilliant bargains. Financial services giant Phoenix Group Holdings (LSE:PHNX) is one blue-chip share that I think still offers attractive value despite recent gains. Let me show you why.

Created with Highcharts 11.4.3Phoenix Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Should you invest £1,000 in Alliance Witan right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Alliance Witan made the list?

See the 6 stocks

Earnings

The first port of call is to consider Phoenix’s share price relative to forecast earnings. At 539p per share, it trades on a forward price-to-earnings (P/E) ratio of 11.5 times, which is just above the FTSE 100 average of 10.5 times.

It’s also worth considering the company’s value compared with other firms in the savings, wealth, and pensions arena. As the chart below shows, its P/E ratio is below those of (in descending order) Zurich Insurance Group, Aviva, and Legal & General Group.

It is marginally more expensive on this basis than M&G, however. So, on balance the business offers solid (if not outstanding) value, in my opinion.

Phoenix Group's P/E ratio versus the competition.
Created with TradingView

Dividends

The forward dividend yield is another critical measure of how cheap a share is. This represents dividend income as a percentage of the current share price.

On this metric, Phoenix Group’s shares can be considered pretty outstanding. At 10%, the yield here soars above the 3.7% average for FTSE shares.

Furthermore, as the table below indicates, Phoenix also comfortably beats all of its rivals (bar M&G) on this metric.

StockForward dividend yield
Aviva7%
Legal & General8.4% 
M&G10.5%
Zurich5.9%

Assets

The last thing to consider is how Phoenix’s share price stacks up relative to the value of the firm’s assets. A popular way to do this is to calculate its price-to-book (P/B) ratio, which divides the firm’s total book value (assets minus liabilities) by the total number of outstanding shares.

With a reading of around 2.2, the business trades at a decent premium to the value of its assets. As an investor I’d be looking for a reading around or below one.

While disappointing, Phoenix isn’t the financial services industry’s most expensive operator based on the P/B ratio. As the chart shows, Legal & General and Zurich carry readings above three. But Phoenix’s multiple is higher than those of Aviva and M&G.

Phoenix Group's P/B ratio versus the competition.
Created with TradingView

Should I buy Phoenix shares?

Based on these charts, M&G is hands down the best value stock across this grouping, as well as compared with the broader FTSE 100.

But what about Phoenix? Well the charts indicate to me that Phoenix shares still offer solid for value. Indeed, they could be especially attractive for investors seeking passive income thanks to that enormous dividend yield that’s supported by a robust balance sheet (its Solvency II surplus came in at £3.9bn in 2023).

The financial services industry may suffer further turbulence if the interest rates remain elevated. But the longer-term outlook here remains robust, with rapidly ageing populations tipped to supercharge demand for wealth and pension products.

I think Phoenix — which is the UK’s largest savings and retirement business — could be a great way to generate dividend income in the coming decades. And at current prices I’m considering opening a position.

Should you buy Alliance Witan now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has positions in Aviva Plc. The Motley Fool UK has recommended M&g Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Around a 1-year high, is there enough value left in Next’s share price to make it worth me buying?

Next’s share price has risen a lot in eight months, but there could still be a lot of value left…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

OMG DYOR but IMO this ‘cool’ FTSE 100 stock offers bangin’ VFM!

Despite being one of the least trendy 50-somethings around, our writer considers how Gen Z could help push this FTSE…

Read more »

Investing Articles

2 cheap FTSE 100 and FTSE 250 growth stocks to consider as stock markets sink

I think these Footsie and FTSE 250 growth shares could be very shrewd buys to consider in the current climate.…

Read more »

Investing Articles

3 shares I’ve bought in the 2025 stock market sell-off

The stock market has experienced a lot of turbulence in recent weeks. Edward Sheldon has been taking advantage and buying…

Read more »

Investing Articles

Investors considering HSBC shares could aim for £8,453 a year in passive income from just £5 a day!

A relatively small daily investment in HSBC shares over several years can produce an extraordinary level of annual passive income…

Read more »

Investing Articles

The Rolls-Royce share price has fallen! Is this the moment investors have been waiting for?

Even the Rolls-Royce share price can't escape current stock market volatility, falling slightly over the last week. Should investors consider…

Read more »

Modern suburban family houses with car on driveway
Investing Articles

Down 59% from its 12-month highs, is this FTSE 250 stock too cheap to ignore?

Shares in FTSE 250 housebuilder Vistry are almost certainly too cheap to ignore. But are they discounted enough to offset…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

As the S&P 500 struggles to recover, here’s what Warren Buffett’s doing

The S&P 500 is fighting to regain its February highs amid ongoing trade tariff uncertainty. Our writer looks to the…

Read more »