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Brown & Brown, Inc. (BRO) Intrinsic Value

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

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Brown & Brown, Inc. (BRO)

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Intrinsic Value (DCF)

Current$79.61
→
Intrinsic$90.44
+14%
$57.83$90.44$152.35
Market implies 17% growth for 5 years
BRO appears fairly valued — current price aligns with our DCF estimate.
At $80, the market prices in continued high-teens cash flow growth (17%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $58 → Bull $152. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →16%18%20%22%
8%$113$123$134$146
10%$76$83$90$99
12%$55$61$66$72
14%$42$46$51$56

Bull Case

  • Bull case ($152) offers 91% upside at 24% growth, 9% discount
  • 12% margin of safety vs. base case estimate
  • Market-implied growth (17%) ≤ historical CAGR (20%)

Bear Case

  • Bear case ($58) implies 27% downside at 16% growth, 12% discount
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5-Year Net Income Projection

Year 1$1.19B
Year 2$1.43B
Year 3$1.72B
Year 4$2.06B
Year 5$2.47B
Terminal$36.36B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$993.00MTTM 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 BRO stock undervalued or overvalued?
🟡 FAIRLY VALUED

BRO trades at $79.61, within 10% of our $90.44 intrinsic value estimate. At 10.0% WACC and 20.0% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $55.22 (bear) to $142.31 (bull).

What is BRO's intrinsic value?

Using a 5-year DCF model: Base FCF of $993M, projected at 20.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $3.38B net debt and dividing by 0.28B shares: Bear $55.22 | Base $90.44 | Bull $142.31. Current price $79.61 implies +13% to base case.

How is BRO's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% 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=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($29.07B).

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: 29.3x.