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The Hartford Financial Services Group, Inc. (HIG) Intrinsic Value

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

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The Hartford Financial Services Group, Inc. (HIG)

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Intrinsic Value (DCF)

Current$130.82
→
Intrinsic$214.49
+64%
$142.02$214.49$352.18
Market implies 2% growth for 5 years
DCF analysis suggests HIG could have 64% upside at 13% growth — verify assumptions match your view.
At $131, the market prices in only 2% growth — below historical 13%, suggesting low expectations.
Range: Bear $142 → Bull $352. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →9%11%13%15%
8%$260$284$310$338
10%$180$197$214$233
12%$136$148$162$176
14%$108$118$128$139

Bull Case

  • Bull case ($352) offers 169% upside at 15% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (2%) ≤ historical CAGR (13%)

Bear Case

  • Bear case ($142) with 10% growth, 12% discount rate
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5-Year Net Income Projection

Year 1$3.50B
Year 2$3.95B
Year 3$4.45B
Year 4$5.01B
Year 5$5.64B
Terminal$82.97B

📐 Model Inputs

Growth Rate12.6%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$3.11BTTM 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 HIG stock undervalued or overvalued?
🟢 UNDERVALUED

HIG trades at $130.82 vs. our DCF-derived intrinsic value of $214.49, implying +57% upside. At a 10.0% WACC and 12.6% projected FCF growth, the market appears to be underpricing the present value of HIG's future cash flows. The bear case ($144.99) still suggests upside, providing margin of safety.

What is HIG's intrinsic value?

Using a 5-year DCF model: Base FCF of $3.11B, projected at 12.6% 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 $4.18B net debt and dividing by 0.30B shares: Bear $144.99 | Base $214.49 | Bull $311.29. Current price $130.82 implies +57% to base case.

How is HIG's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 12.6% 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 ($68.23B).

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: 21.9x.