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Manulife Financial Corporation (MFC) Intrinsic Value

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

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Manulife Financial Corporation (MFC)

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Intrinsic Value (DCF)

Current$37.60
→
Intrinsic$127.30
+239%
$87.29$127.30$206.77
Market implies 1% growth for 5 years
DCF analysis suggests MFC could have 239% upside at 25% growth — verify assumptions match your view.
At $38, the market prices in only 1% growth — below historical 25%, suggesting low expectations.
Range: Bear $87 → Bull $207. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →21%23%25%27%
8%$160$172$185$199
10%$110$119$127$137
12%$84$90$97$104
14%$68$73$78$83

Bull Case

  • Bull case ($207) offers 450% upside at 30% growth, 8% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($87) with 20% growth, 12% discount rate
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Net Income Projection

Year 1$7.04B
Year 2$8.80B
Year 3$11.00B
Year 4$13.75B
Year 5$17.18B
Terminal$272.31B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$5.63BTTM 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 MFC stock undervalued or overvalued?
🟢 UNDERVALUED

MFC trades at $37.60 vs. our DCF-derived intrinsic value of $106.46, implying +185% upside. At a 9.5% WACC and 25.0% projected FCF growth, the market appears to be underpricing the present value of MFC's future cash flows. The bear case ($70.89) still suggests upside, providing margin of safety.

What is MFC's intrinsic value?

Using a 5-year DCF model: Base FCF of $5.63B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-11.63B net debt and dividing by 1.78B shares: Bear $70.89 | Base $106.46 | Bull $160.51. Current price $37.60 implies +185% to base case.

How is MFC's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% 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=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($178.41B).

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: 31.7x.