At £4.76, is the Aviva share price a steal? Here’s what the charts say!

Aviva has outperformed the Footsie over the last year. But is there still value in its share price? This Fool reckons so. Here’s why.

| 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.

After a strong 2023, the Aviva (LSE: AV.) share price has kept up its fine form in 2024. Year to date, the stock has climbed 9.8%.

That means in the last 12 months, the insurance stalwart is up 19.7%. In the previous five years, it has returned 15.5%. It far outperforms the FTSE 100 on all three of those timescales. Looking back, Aviva has proved to be a shrewd investment.

But now at £4.76 a pop, is it a smart time to consider buying some shares today? I’ve had Aviva on my watchlist for a while. I want to find out if there’s any value left to squeeze out of its share price in the long run.

Price-to-earnings

I want to first measure this by looking at its price-to-earnings (P/E) ratio. This is one of the best and most common valuation metrics around.

The Footsie average P/E is around 11. Therefore, and as seen below, Aviva’s P/E of 12.6 may not scream value on the surface.

Nevertheless, I still think that looks like good value. Not only is that cheaper than its historical average (14), but it’s also cheaper than peers such as Admiral Group and Prudential. Based on that, I see value in it at £4.67.


Created with TradingView

Dividend yield

I also want to look at its dividend yield. As an investor who’s keen to continuing building a portfolio filled with high-quality stocks producing stable streams of passive income, this is important.

As the chart below shows, Aviva yields a mighty 7.7%. That’s over double the Footsie average (3.6%). It’s also considerably higher than both Admiral Group and Prudential’s payouts. Again, this signals that Aviva looks like an investment worth considering today.


Created with TradingView

A strong business

So, the stock looks appealing at its current price. But I also want to dig deeper into how the business is performing.

Overall, I’m impressed with what I see. Operating profit was up, and costs were down. The firm achieved its £750m cost reduction target a year early.

In Q1 of this year, it provided further positive news. Sales grew in its capital-light businesses. Aviva also continues with its streamlining business to focus on its core markets. Recently, it completed the exit from its Singapore joint venture for just shy of £1bn, “further simplifying the group’s geographic footprint”.

The risks

Every investment comes with risks. There are a few I see with Aviva.

For example, streamlining leaves the insurance giant relying on just a few markets. Any blips in those could see the share price stumbling.

To add to that, many are predicting the UK economy will continue to struggle for growth in the months to come, which will weigh down on the business. We’ve got a general election to deal with as well as further issues such as inflation and interest rate cuts.

Time to buy?

But all things considered, I think Aviva looks like good value today. It’s a stock I’ve been keeping a close eye on. If I have the cash this month, I plan to buy some shares and start building up my position.

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.

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Admiral Group Plc and Prudential 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

Investing Articles

Here’s a starter portfolio of FTSE 250 shares to consider for growth, dividends, and value!

Looking to create a well-diversified portfolio of FTSE 250 shares? Here are three top stocks I think savvy investors should…

Read more »

Investing Articles

At a 52-week low, is this penny stock the bargain of the year?

This penny stock trades for less than 13p after falling nearly 89% in five years, but is a share price…

Read more »

Investing Articles

Up 46% in a fortnight! Is this soaring ex-penny stock still a FTSE gem at 59p?

SRT Marine Systems (LON:SRT) has been one of the very best FTSE small-cap stocks to own after surging 132% in…

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

Here’s how much passive income a £10,000 investment in Greggs shares could generate in 2026

Are Greggs shares a good choice for investors looking for passive income? Stephen Wright thinks analysts might be underestimating the…

Read more »

Investing Articles

This FTSE 100 fashion icon just broke the £1bn profit ceiling! What’s next?

FTSE 100 fashion retailer Next posted £1bn annual profit in this morning's results. In light of recent trade tariffs, is…

Read more »

Investing For Beginners

Here’s what the Trump auto tariffs could mean for the UK stock market

Jon Smith explains the implications of fresh auto tariffs on the stock market and flags up a UK share that…

Read more »

Investing Articles

Record £1bn profit gives the Next share price a boost. Is it still cheap?

The Next share price has been soaring ahead of sector rivals, and the latest full-year results might just give us…

Read more »

Midnight is celebrated along the River Thames in London with a spectacular and colourful firework display.
Investing Articles

Up 16% in a day on a thrilling new forecast – can this FTSE 250 stock make investors rich again?

Harvey Jones was delighted yesterday when FTSE 250 grocery chain Ocado Group rocketed on a positive broker update. Can investors…

Read more »