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Everest Re Group, Ltd. (EG) Intrinsic Value

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

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Everest Re Group, Ltd. (EG)

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Intrinsic Value (DCF)

Current$321.21
→
Intrinsic$694.32
+116%
$440.98$694.32$1,175.58
Market implies 1% growth for 5 years
DCF analysis suggests EG could have 116% upside at 16% growth — verify assumptions match your view.
At $321, the market prices in only 1% growth — below historical 16%, suggesting low expectations.
Range: Bear $441 → Bull $1176. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →12%14%16%18%
8%$860$943$1031$1126
10%$577$634$694$759
12%$420$463$508$556
14%$321$354$390$428

Bull Case

  • Bull case ($1176) offers 266% upside at 19% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (16%)

Bear Case

  • Bear case ($441) with 13% growth, 12% discount rate
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5-Year Net Income Projection

Year 1$1.59B
Year 2$1.84B
Year 3$2.13B
Year 4$2.46B
Year 5$2.85B
Terminal$41.91B

📐 Model Inputs

Growth Rate15.7%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$1.37BTTM 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 EG stock undervalued or overvalued?
🟢 UNDERVALUED

EG trades at $321.21 vs. our DCF-derived intrinsic value of $694.32, implying +109% upside. At a 10.0% WACC and 15.7% projected FCF growth, the market appears to be underpricing the present value of EG's future cash flows. The bear case ($437.95) still suggests upside, providing margin of safety.

What is EG's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.37B, projected at 15.7% 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 $4.39B net debt and dividing by 0.04B shares: Bear $437.95 | Base $694.32 | Bull $1060.25. Current price $321.21 implies +109% to base case.

How is EG's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 15.7% 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 ($34.04B).

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: 24.8x.