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What is the TRUE Value of American International Group?


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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.

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