Loews Corporation (L) Intrinsic Value

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

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Loews Corporation (L)

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Intrinsic Value (DCF)

Current$103.16

→

Intrinsic$121.78

+18%

$70.95$121.78$218.31

Market implies 13% growth for 5 years

Growth 16%

Discount 10%

Terminal 3%

L shows 18% potential upside using 16% growth — reasonable if fundamentals hold.

At $103, the market prices in 13% annual cash flow growth — a moderate expectation aligned with historical trends (16%).

Range: Bear $71 → Bull $218. Current price implies expectations below the base case, but well above the bear case.

Discount ↓Growth →	12%	14%	16%	18%
8%	$155	$172	$189	$208
10%	$98	$110	$122	$135
12%	$67	$75	$84	$94
14%	$47	$54	$61	$68

Bull Case

Bull case ($218) offers 112% upside at 19% growth, 9% discount
15% margin of safety vs. base case estimate
Market-implied growth (13%) ≤ historical CAGR (16%)

Bear Case

Bear case ($71) implies 31% downside at 13% growth, 12% discount

Intrinsic Value vs Current Price

5-Year Cash Flow Projection

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5-Year Net Income Projection

Year 1$1.64B

Year 2$1.90B

Year 3$2.20B

Year 4$2.55B

Year 5$2.95B

Terminal$43.44B

📐 Model Inputs

Growth Rate15.9%5Y CAGR (cascade: 5Y→3Y→TTM)

Discount Rate10.0%WACC estimate

Terminal Growth3.0%Perpetuity rate

Base Net Income$1.41BTTM 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.

Frequently Asked Questions

Is L stock undervalued or overvalued?

🟢 UNDERVALUED

L trades at $103.16 vs. our DCF-derived intrinsic value of $121.78, implying +16% upside. At a 10.0% WACC and 15.9% projected FCF growth, the market appears to be underpricing the present value of L's future cash flows. The bear case ($70.22) still suggests upside, providing margin of safety.

What is L's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.41B, projected at 15.9% 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 $8.40B net debt and dividing by 0.22B shares: Bear $70.22 | Base $121.78 | Bull $195.44. Current price $103.16 implies +16% to base case.

How is L's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 15.9% 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 ($35.26B).

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: 24.9x.

Loews Corporation (L) Intrinsic Value