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Kemper Corporation (KMPR) Intrinsic Value

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

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Kemper Corporation (KMPR)

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Intrinsic Value (DCF)

Current$38.61
→
Intrinsic$68.62
+78%
$40.49$68.62$122.09
Market implies 1% growth for 5 years
DCF analysis suggests KMPR could have 78% upside at 8% growth — verify assumptions match your view.
At $39, the market prices in only 1% growth — below historical 8%, suggesting low expectations.
Range: Bear $40 → Bull $122. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →4%6%8%10%
8%$85$95$105$116
10%$55$61$69$76
12%$38$43$48$54
14%$27$31$36$40

Bull Case

  • Bull case ($122) offers 216% upside at 10% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (8%)

Bear Case

  • Bear case ($40) with 6% growth, 12% discount rate
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5-Year Net Income Projection

Year 1$343.22M
Year 2$370.68M
Year 3$400.34M
Year 4$432.36M
Year 5$466.95M
Terminal$6.87B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$317.80MTTM 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 KMPR stock undervalued or overvalued?
🟢 UNDERVALUED

KMPR trades at $38.61 vs. our DCF-derived intrinsic value of $68.62, implying +71% upside. At a 10.0% WACC and 8.0% projected FCF growth, the market appears to be underpricing the present value of KMPR's future cash flows. The bear case ($44.06) still suggests upside, providing margin of safety.

What is KMPR's intrinsic value?

Using a 5-year DCF model: Base FCF of $318M, 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 $1.33B net debt and dividing by 0.06B shares: Bear $44.06 | Base $68.62 | Bull $101.45. Current price $38.61 implies +71% to base case.

How is KMPR'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 ($5.77B).

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.