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Hamilton Insurance Group, Ltd. (HG) Intrinsic Value

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

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Hamilton Insurance Group, Ltd. (HG)

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Intrinsic Value (DCF)

Current$26.37
→
Intrinsic$129.29
+390%
$90.74$129.29$202.47
Market implies 1% growth for 5 years
DCF analysis suggests HG could have 390% upside at 21% growth — verify assumptions match your view.
At $26, the market prices in only 1% growth — below historical 21%, suggesting low expectations.
Range: Bear $91 → Bull $202. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →17%19%21%23%
8%$156$168$181$195
10%$112$120$129$139
12%$88$94$101$108
14%$72$77$82$88

Bull Case

  • Bull case ($202) offers 668% upside at 25% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (21%)

Bear Case

  • Bear case ($91) with 17% growth, 12% discount rate
  • Using 21% growth — aggressive, watch for mean reversion
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5-Year Net Income Projection

Year 1$485.33M
Year 2$588.23M
Year 3$712.94M
Year 4$864.10M
Year 5$1.05B
Terminal$15.41B

📐 Model Inputs

Growth Rate21.2%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$400.43MTTM 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 HG stock undervalued or overvalued?
🟢 UNDERVALUED

HG trades at $26.37 vs. our DCF-derived intrinsic value of $123.87, implying +300% upside. At a 10.0% WACC and 21.2% projected FCF growth, the market appears to be underpricing the present value of HG's future cash flows. The bear case ($84.12) still suggests upside, providing margin of safety.

What is HG's intrinsic value?

Using a 5-year DCF model: Base FCF of $400M, projected at 21.2% 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 $-847M net debt and dividing by 0.10B shares: Bear $84.12 | Base $123.87 | Bull $182.42. Current price $26.37 implies +300% to base case.

How is HG's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 21.2% 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 ($11.72B).

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.