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Hagerty, Inc. (HGTY) Intrinsic Value

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

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Hagerty, Inc. (HGTY)

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Intrinsic Value (DCF)

Current$12.77
→
Intrinsic$6.20
-51%
$4.06$6.20$10.25
Current price reflects execution expectations above 25% growth — not unreasonable for quality businesses.
Range: Bear $4 → Bull $10. 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: $10).
Discount ↓Growth →21%23%25%27%
8%$8$8$9$10
10%$5$6$6$7
12%$4$4$5$5
14%$3$3$4$4

Bull Case

  • Bull case ($10) with 29% growth, 9% discount rate

Bear Case

  • Bear case ($4) implies 68% downside at 20% growth, 12% discount
  • Trading 51% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($10) — requires exceptional execution
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5-Year Net Income Projection

Year 1$21.20M
Year 2$26.40M
Year 3$32.89M
Year 4$40.97M
Year 5$51.04M
Terminal$750.97M

📐 Model Inputs

Growth Rate24.6%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$17.02MTTM 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 HGTY stock undervalued or overvalued?
🔴 OVERVALUED

HGTY trades at $12.77 vs. our DCF-derived intrinsic value of $5.14, implying -60% downside. Using a 10.0% WACC and 24.6% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($7.99) suggests limited upside.

What is HGTY's intrinsic value?

Using a 5-year DCF model: Base FCF of $17M, projected at 24.6% 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 $43M net debt and dividing by 0.09B shares: Bear $3.20 | Base $5.14 | Bull $7.99. Current price $12.77 implies -60% to base case.

How is HGTY's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 24.6% 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 ($498M).

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.