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Skyward Specialty Insurance Group, Inc. (SKWD) Intrinsic Value

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

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Skyward Specialty Insurance Group, Inc. (SKWD)

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Intrinsic Value (DCF)

Current$46.48
→
Intrinsic$101.54
+118%
$69.15$101.54$162.99
Market implies 5% growth for 5 years
DCF analysis suggests SKWD could have 118% upside at 25% growth — verify assumptions match your view.
At $46, the market prices in only 5% growth — below historical 25%, suggesting low expectations.
Range: Bear $69 → Bull $163. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →21%23%25%27%
8%$125$135$146$157
10%$87$94$102$109
12%$67$72$77$83
14%$54$58$62$66

Bull Case

  • Bull case ($163) offers 251% upside at 30% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (5%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($69) 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$148.53M
Year 2$185.67M
Year 3$232.09M
Year 4$290.11M
Year 5$362.63M
Terminal$5.34B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$118.83MTTM 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 SKWD stock undervalued or overvalued?
🟢 UNDERVALUED

SKWD trades at $46.48 vs. our DCF-derived intrinsic value of $84.12, implying +77% upside. At a 10.0% WACC and 25.0% projected FCF growth, the market appears to be underpricing the present value of SKWD's future cash flows. The bear case ($55.19) still suggests upside, providing margin of safety.

What is SKWD's intrinsic value?

Using a 5-year DCF model: Base FCF of $119M, projected at 25.0% 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 $-2M net debt and dividing by 0.04B shares: Bear $55.19 | Base $84.12 | Bull $126.72. Current price $46.48 implies +77% to base case.

How is SKWD'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=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($3.48B).

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: 29.3x.