The Price-to-Earnings (PE) ratio is a popular valuation tool for companies like Burford Capital that have established profitability. Using the PE ratio is especially effective when a company is consistently earning profits, because it directly relates a company’s stock price to its current earnings performance.

Our Excess Returns analysis suggests Burford Capital is undervalued by 52.9%. Track this in your watchlist or portfolio , or discover 841 more undervalued stocks based on cash flows .

The Excess Returns model places Burford Capital’s estimated intrinsic value well above its current share price, indicating the stock is 52.9% undervalued according to this method. This suggests the market may be underappreciating Burford’s ability to generate excess returns on invested capital.

For Burford Capital, the current Book Value is $11.44 per share, with a Stable EPS (earnings per share) of $1.39 per share. These numbers are based on the median return on equity from the past five years. The Cost of Equity stands at $1.04 per share, resulting in an Excess Return of $0.35 per share. Over that period, Burford has averaged a 10.30% return on equity. Looking ahead, analysts expect the Stable Book Value to rise to $13.51 per share, based on weighted future Book Value estimates from three analysts.

The Excess Returns valuation model helps determine a company’s intrinsic value by examining how much profit it generates above its cost of equity, relative to its book value. This model focuses on return on invested capital and whether these returns are likely to persist or grow in the future.

With Burford Capital scoring a perfect 6 out of 6 on our valuation checks , there’s plenty of evidence it could be undervalued. Let’s walk through the standard valuation approaches and explore an even smarter way to assess its true worth as we go.

Recent headlines have focused on shifts in the global litigation finance landscape, including regulatory developments and high-profile case resolutions involving Burford, helping explain the renewed volatility in the stock. These news stories have investors re-evaluating both the growth prospects and uncertainty surrounding the company.

Despite a strong long-term record, Burford Capital’s share price has dropped sharply, falling 11.9% in the past week, 16.7% over 30 days, and 22.8% year-to-date. The stock is still up 19.2% over three years.

If you have ever wondered whether Burford Capital’s current share price is a bargain or simply reflects deeper risks, you are not alone, and it’s exactly the question we’ll tackle today.

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However, what counts as a “normal” or “fair” PE ratio can vary depending on factors like the company’s future growth expectations and perceived risk. Companies with better growth prospects or lower risk typically command higher PE ratios, while those facing more uncertainty or stagnation might trade at lower multiples.

Burford Capital is currently trading at a PE ratio of 9.00x. This is well below the Diversified Financial industry average of 15.12x and much lower than its peer average of 49.58x. Clearly, the market is pricing Burford more conservatively than peers and the industry as a whole.

To get past simple benchmarks, Simply Wall St’s proprietary “Fair Ratio” uses a more holistic approach. It calculates what Burford’s PE should be after factoring in growth forecasts, risk profile, profit margins, industry group, and market cap. This provides a rounded view of what’s justified. This method is more meaningful than comparing raw multiples since it tailors the valuation to Burford’s specific strengths, risk, and sector context.

For Burford Capital, the Fair PE Ratio is calculated at 17.70x, versus its current 9.00x. This sizable gap suggests the market is undervaluing the company relative to its fundamentals and outlook.

Result: UNDERVALUED

NYSE:BUR PE Ratio as at Nov 2025

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1408 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Burford Capital Narrative

Earlier we mentioned that there’s an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your investment “story”—where you tie your perspective about a company’s future to your assumptions for revenue, profit, and fair value. Instead of relying only on basic ratios, Narratives connect what you believe about Burford Capital (for example, that global expansion will boost earnings, or that legal risks might weigh on margins) to actual financial forecasts, letting you see the fair value your story implies.

Narratives are a core feature on Simply Wall St’s Community page, trusted by millions of investors because they make complex analysis feel much more approachable. You can easily create or explore community Narratives, update your view when new news or earnings are released, and instantly check whether your fair value matches up with the current share price, empowering you to decide when to buy, hold or sell.

For example, one investor might have a bullish Narrative for Burford Capital, expecting robust global demand and assigning a fair value of $22.5 per share, while a more cautious Narrative could justify only $18.0, focusing on risks from single-case concentration and regulatory change. Narratives update as new data arrives, so your analysis always reflects the latest facts.

Do you think there’s more to the story for Burford Capital? Head over to our Community to see what others are saying!

NYSE:BUR Community Fair Values as at Nov 2025

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include BUR.

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