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Sun Life Financial Inc. (SLF) Intrinsic Value

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

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Sun Life Financial Inc. (SLF)

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Intrinsic Value (DCF)

Current$62.53
→
Intrinsic$87.50
+40%
$56.21$87.50$146.99
Market implies 1% growth for 5 years
DCF analysis suggests SLF could have 40% upside at 8% growth — verify assumptions match your view.
At $63, the market prices in only 1% growth — below historical 8%, suggesting low expectations.
Range: Bear $56 → Bull $147. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →4%6%8%10%
8%$106$117$128$140
10%$72$80$88$96
12%$53$59$65$71
14%$42$46$51$56

Bull Case

  • Bull case ($147) offers 135% upside at 10% growth, 9% discount
  • 29% margin of safety vs. base case estimate
  • Market-implied growth (1%) ≤ historical CAGR (8%)

Bear Case

  • Bear case ($56) implies 10% downside at 6% growth, 12% discount
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5-Year Net Income Projection

Year 1$3.42B
Year 2$3.70B
Year 3$3.99B
Year 4$4.31B
Year 5$4.66B
Terminal$68.56B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$3.17BTTM 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 SLF stock undervalued or overvalued?
🟢 UNDERVALUED

SLF trades at $62.53 vs. our DCF-derived intrinsic value of $87.50, implying +37% upside. At a 10.0% WACC and 8.0% projected FCF growth, the market appears to be underpricing the present value of SLF's future cash flows. The bear case ($60.19) still suggests upside, providing margin of safety.

What is SLF's intrinsic value?

Using a 5-year DCF model: Base FCF of $3.17B, 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 $6.74B net debt and dividing by 0.58B shares: Bear $60.19 | Base $87.50 | Bull $124.03. Current price $62.53 implies +37% to base case.

How is SLF'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 ($57.58B).

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.