Up 17.5% YTD, is Great-West Lifeco Stock (TSE:GWO) Overvalued?

Great-West Lifeco (TSE:GWO), one of the three big Canadian life insurance firms, has been rallying consistently since before the beginning of the year. Year-to-date, it’s up over 17%, which is remarkable for such a stable firm. However, this has pushed the stock into overvalued and overbought territory, in our opinion. Therefore, we are neutral on the stock.

Why GWO Stock is Overvalued

To show that Great-West Lifeco stock is overvalued, we will use the excess returns model, which is more appropriate for financial companies because they tend to have volatile free cash flows.

As a result, trying to create forecasts for them doesn’t work well. The excess returns model allows us to use historical…

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