Selective Insurance Group, Inc. (SIGI) Intrinsic Value

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

Popular:

Selective Insurance Group, Inc. (SIGI)

View Full Profile →

Intrinsic Value (DCF)

Current$82.97

→

Intrinsic$61.90

-25%

$39.67$61.90$104.16

Market implies 18% growth for 5 years

Growth 11%

Discount 10%

Terminal 3%

SIGI trades at a premium to our conservative estimate — investors expect above-average performance.

At $83, the market prices in continued high-teens cash flow growth (18%) — likely reflecting buybacks, margin stability, and ecosystem strength.

Range: Bear $40 → Bull $104. Current price implies expectations above the base case, closer to bull expectations.

Discount ↓Growth →	7%	9%	11%	13%
8%	$76	$83	$91	$100
10%	$51	$56	$62	$68
12%	$38	$42	$46	$50
14%	$29	$32	$35	$39

Bull Case

Bull case ($104) offers 26% upside at 14% growth, 9% discount
Conservative 11% growth assumption is achievable based on track record

Bear Case

Bear case ($40) implies 52% downside at 9% growth, 12% discount
Price reflects 18% growth expectations vs 11% historical — high bar to clear
Trading 25% above base case — execution must exceed assumptions to justify

Intrinsic Value vs Current Price

5-Year Cash Flow Projection

Loading charts...

5-Year Net Income Projection

Year 1$230.40M

Year 2$256.44M

Year 3$285.41M

Year 4$317.66M

Year 5$353.55M

Terminal$5.20B

📐 Model Inputs

Growth Rate11.3%5Y CAGR (cascade: 5Y→3Y→TTM)

Discount Rate10.0%WACC estimate

Terminal Growth3.0%Perpetuity rate

Base Net Income$207.01MTTM 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 SIGI stock undervalued or overvalued?

🔴 OVERVALUED

SIGI trades at $82.97 vs. our DCF-derived intrinsic value of $61.90, implying -26% downside. Using a 10.0% WACC and 11.3% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($90.54) suggests limited upside.

What is SIGI's intrinsic value?

Using a 5-year DCF model: Base FCF of $207M, projected at 11.3% 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 $508M net debt and dividing by 0.06B shares: Bear $41.11 | Base $61.90 | Bull $90.54. Current price $82.97 implies -26% to base case.

How is SIGI's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 11.3% 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 ($4.30B).

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: 20.8x.

Selective Insurance Group, Inc. (SIGI) Intrinsic Value