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HNI Corporation (HNI) Intrinsic Value

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

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HNI Corporation (HNI)

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Intrinsic Value (DCF)

Current$46.12
→
Intrinsic$56.15
+22%
$35.34$56.15$95.72
Market implies 4% growth for 5 years
HNI shows 22% potential upside using 8% growth — reasonable if fundamentals hold.
At $46, the market prices in only 4% growth — below historical 8%, suggesting low expectations.
Range: Bear $35 → Bull $96. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →4%6%8%10%
8%$68$76$83$91
10%$46$51$56$62
12%$34$37$41$45
14%$26$29$32$35

Bull Case

  • Bull case ($96) offers 108% upside at 10% growth, 9% discount
  • 18% margin of safety vs. base case estimate
  • Market-implied growth (4%) ≤ historical CAGR (8%)

Bear Case

  • Bear case ($35) implies 23% downside at 6% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$190.19M
Year 2$205.40M
Year 3$221.84M
Year 4$239.58M
Year 5$258.75M
Terminal$3.81B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$176.10MTTM 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. See FAQ below for full methodology.

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Frequently Asked Questions

Is HNI stock undervalued or overvalued?
🟢 UNDERVALUED

HNI trades at $46.12 vs. our DCF-derived intrinsic value of $56.15, implying +30% upside. At a 10.0% WACC and 8.0% projected FCF growth, the market appears to be underpricing the present value of HNI's future cash flows. The bear case ($37.98) still suggests upside, providing margin of safety.

What is HNI's intrinsic value?

Using a 5-year DCF model: Base FCF of $176M, projected at 8.0% 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 $474M net debt and dividing by 0.05B shares: Bear $37.98 | Base $56.15 | Bull $80.45. Current price $46.12 implies +30% to base case.

How is HNI's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.0% 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 ($3.20B).

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: 18.2x.