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Aflac Incorporated (AFL) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Aflac Incorporated (AFL)

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Intrinsic Value (DCF)

Current$107.96
→
Intrinsic$267.25
+148%
$178.27$267.25$444.22
Market implies 1% growth for 5 years
DCF analysis suggests AFL could have 148% upside at 17% growth — verify assumptions match your view.
At $108, the market prices in only 1% growth — below historical 17%, suggesting low expectations.
Range: Bear $178 → Bull $444. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →13%15%17%19%
8%$334$363$394$427
10%$228$247$267$289
12%$171$185$200$217
14%$137$148$159$172

Bull Case

  • Bull case ($444) offers 311% upside at 20% growth, 8% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (17%)

Bear Case

  • Bear case ($178) with 13% growth, 12% discount rate
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5-Year Net Income Projection

Year 1$6.36B
Year 2$7.43B
Year 3$8.67B
Year 4$10.13B
Year 5$11.83B
Terminal$187.49B

📐 Model Inputs

Growth Rate16.8%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$5.44BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Uses Net Income (FCF not meaningful for insurers). See FAQ below for full methodology.

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Frequently Asked Questions

Is AFL stock undervalued or overvalued?
🟢 UNDERVALUED

AFL trades at $107.96 vs. our DCF-derived intrinsic value of $267.25, implying +139% upside. At a 9.5% WACC and 16.8% projected FCF growth, the market appears to be underpricing the present value of AFL's future cash flows. The bear case ($175.75) still suggests upside, providing margin of safety.

What is AFL's intrinsic value?

Using a 5-year DCF model: Base FCF of $5.44B, projected at 16.8% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $1.27B net debt and dividing by 0.57B shares: Bear $175.75 | Base $267.25 | Bull $403.18. Current price $107.96 implies +139% to base case.

How is AFL's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 16.8% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($152.27B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 28.0x.