Munich Re: Sensible share buybacks in 2023 despite rising prices and other options

Munich Re: Sensible share buybacks in 2023 despite rising prices and other options

According to a report by www.aktienwelt360.de,

Munich Re, a reinsurer, has not only relied on a strong dividend but also on share buybacks for many years. There has been a pause in buybacks in recent years due to the coronavirus pandemic, but since 2022 the company has again invested over a billion euros in share buybacks. This has resulted in the number of shares outstanding being reduced, which can potentially add value.

Munich Re shares have risen significantly, prompting some investors to question whether further share buybacks are appropriate. An analysis shows that the share cannot be viewed as expensive despite the price increase, as the consolidated result has also grown significantly. With a forward price-to-earnings ratio of under 12, the valuation does not appear to be expensive overall, and further operating tailwinds could lead to additional growth.

Nevertheless, the author of the article believes that Munich Re's management should not intensify share buybacks, but rather maintain the current investment amount. However, the moderate valuation and possible further growth suggest that share buybacks should still be considered.

Overall, the recommendation is that Munich Re should continue to buy back shares, but not to an intensified extent. The valuation is moderate and further growth is possible. However, it is proposed to reserve some of the funds for future repurchases and, if necessary, to undertake larger repurchases at a later date.

It is important that investors and Munich Re management carefully analyze the potential impact of share buybacks on the market, the consumer and the industry in order to make informed decisions.