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Old Republic International Corporation (ORI) Intrinsic Value

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

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Old Republic International Corporation (ORI)

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Intrinsic Value (DCF)

Current$43.32
→
Intrinsic$53.56
+24%
$34.99$53.56$88.88
Market implies 3% growth for 5 years
ORI shows 24% potential upside using 8% growth — reasonable if fundamentals hold.
At $43, the market prices in only 3% growth — below historical 8%, suggesting low expectations.
Range: Bear $35 → Bull $89. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →4%6%8%10%
8%$64$71$78$85
10%$44$49$54$59
12%$33$37$40$44
14%$26$29$32$35

Bull Case

  • Bull case ($89) offers 105% upside at 10% growth, 9% discount
  • 19% margin of safety vs. base case estimate
  • Market-implied growth (3%) ≤ historical CAGR (8%)

Bear Case

  • Bear case ($35) implies 19% downside at 6% growth, 12% discount
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5-Year Net Income Projection

Year 1$920.92M
Year 2$994.59M
Year 3$1.07B
Year 4$1.16B
Year 5$1.25B
Terminal$18.44B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$852.70MTTM 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 ORI stock undervalued or overvalued?
🟢 UNDERVALUED

ORI trades at $43.32 vs. our DCF-derived intrinsic value of $53.56, implying +26% upside. At a 10.0% WACC and 8.0% projected FCF growth, the market appears to be underpricing the present value of ORI's future cash flows. The bear case ($37.35) still suggests upside, providing margin of safety.

What is ORI's intrinsic value?

Using a 5-year DCF model: Base FCF of $853M, 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 $1.39B net debt and dividing by 0.26B shares: Bear $37.35 | Base $53.56 | Bull $75.25. Current price $43.32 implies +26% to base case.

How is ORI'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 ($15.48B).

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.