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First American Financial Corporation (FAF)
Intrinsic Value (DCF)
Current$60.57
→
Intrinsic$16.91
-72%
$9.70$16.91$30.61
Current price reflects execution expectations above 8% growth — not unreasonable for quality businesses.
Range: Bear $10 → Bull $31. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $31).
| Discount ↓Growth → | 4% | 6% | 8% | 10% |
|---|---|---|---|---|
| 8% | $21 | $24 | $26 | $29 |
| 10% | $13 | $15 | $17 | $19 |
| 12% | $9 | $10 | $12 | $13 |
| 14% | $6 | $7 | $8 | $10 |
Bull Case
- Bull case ($31) with 10% growth, 9% discount rate
- Conservative 8% growth assumption is achievable based on track record
Bear Case
- Bear case ($10) implies 84% downside at 6% growth, 12% discount
- Trading 72% above base case — execution must exceed assumptions to justify
- Price exceeds bull case ($31) — requires exceptional execution
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5-Year Net Income Projection
Year 1$141.59M
Year 2$152.92M
Year 3$165.15M
Year 4$178.36M
Year 5$192.63M
Terminal$2.83B
📐 Model Inputs
Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$131.10MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
DCF estimates based on historical growth rates extrapolated forward. Uses Net Income (FCF not meaningful for insurers). See FAQ below for full methodology.