Apollo Global Management (APO) Leaves Russell Growth Indexes, Is It Still Undervalued?
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Why Apollo Global Management Dropping From Russell Growth Indexes Matters
Apollo Global Management (APO) was recently removed from multiple Russell growth benchmarks, including the Russell Top 200 Growth, Russell 1000 Growth, Russell 3000 Growth, and Russell 3000E Growth indexes.
This index removal can affect how some funds hold or trade Apollo Global Management stock, since many passive products track these benchmarks and periodically rebalance around such changes.
See our latest analysis for Apollo Global Management.
Apollo Global Management’s recent removal from the Russell growth indexes has landed in the middle of a mixed share price story. The stock is at US$119.84, with a 1-day share price return of 1.44%, a 90-day share price return of 14.92%, and a 1-year total shareholder return that is down 17.85% but still up 123.09% over five years. This suggests long term holders have seen strong gains while recent momentum has faded.
If you are weighing how this index change fits into a broader portfolio, it can help to widen the lens and scan 18 top founder-led companies
After the index exit, a 1-year return that is down alongside strong 3 and 5-year gains leaves Apollo Global Management at an interesting crossroads. The key question is whether the current valuation still leaves enough potential upside to justify the risk.
Preferred P/E of 59.8x: Is It Justified for Apollo Global Management?
On traditional valuation metrics, Apollo Global Management looks expensive, with a P/E of 59.8x at a last close of $119.84. That compares with both its US diversified financial peers and an estimated fair P/E level that are much lower. This raises questions about how much future growth is already reflected in the current price.
The P/E multiple compares the share price to the company’s earnings per share, so a higher ratio generally means investors are paying more today for each dollar of current earnings. For a business like Apollo Global Management, which earns fees from asset management and principal investing, a rich P/E can imply the market is placing a premium on its ability to grow earnings over time and sustain profitability across cycles.
Here, the 59.8x P/E is far above the US diversified financial industry average of 15.7x, which is a wide gap. It is also well above an estimated fair P/E of 26.3x that the SWS fair ratio suggests the market could move towards over time. Combined with the recent decline of 17.85% in the 1-year total return and a five year total return of 123.09%, this premium suggests investors are already paying a high price for Apollo Global Management’s earnings profile compared with sector norms and the modelled fair ratio.
