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CNO Financial Group, Inc. (CNO) Intrinsic Value

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

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CNO Financial Group, Inc. (CNO)

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Intrinsic Value (DCF)

Current$42.20
→
Intrinsic$41.37
-2%
$19.95$41.37$82.10
Market implies 8% growth for 5 years
CNO appears fairly valued — current price aligns with our DCF estimate.
At $42, the market prices in 8% annual cash flow growth — a moderate expectation aligned with historical trends (8%).
Range: Bear $20 → Bull $82. Current price implies expectations near the base case.
Discount ↓Growth →4%6%8%10%
8%$54$61$69$78
10%$31$36$41$47
12%$18$22$26$30
14%$10$13$16$20

Bull Case

  • Bull case ($82) offers 95% upside at 10% growth, 9% discount
  • Conservative 8% growth assumption is achievable based on track record

Bear Case

  • Bear case ($20) implies 53% downside at 6% growth, 12% discount
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5-Year Net Income Projection

Year 1$436.32M
Year 2$471.23M
Year 3$508.92M
Year 4$549.64M
Year 5$593.61M
Terminal$8.73B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$404.00MTTM 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 CNO stock undervalued or overvalued?
🟡 FAIRLY VALUED

CNO trades at $42.20, within 10% of our $41.37 intrinsic value estimate. At 10.0% WACC and 8.0% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $22.67 (bear) to $66.38 (bull).

What is CNO's intrinsic value?

Using a 5-year DCF model: Base FCF of $404M, projected at 8.0% 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 $2.86B net debt and dividing by 0.11B shares: Bear $22.67 | Base $41.37 | Bull $66.38. Current price $42.20 implies -4% to base case.

How is CNO's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.0% 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 ($7.34B).

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: 18.2x.