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Unum Group (UNM) Intrinsic Value

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

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Unum Group (UNM)

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Intrinsic Value (DCF)

Current$77.39
→
Intrinsic$187.69
+143%
$122.14$187.69$312.26
Market implies 1% growth for 5 years
DCF analysis suggests UNM could have 143% upside at 13% growth — verify assumptions match your view.
At $77, the market prices in only 1% growth — below historical 13%, suggesting low expectations.
Range: Bear $122 → Bull $312. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →9%11%13%15%
8%$229$251$274$299
10%$157$172$188$205
12%$117$128$140$153
14%$91$100$110$120

Bull Case

  • Bull case ($312) offers 303% upside at 15% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (13%)

Bear Case

  • Bear case ($122) with 10% growth, 12% discount rate
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5-Year Net Income Projection

Year 1$2.00B
Year 2$2.25B
Year 3$2.54B
Year 4$2.85B
Year 5$3.21B
Terminal$47.26B

📐 Model Inputs

Growth Rate12.5%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$1.78BTTM 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 UNM stock undervalued or overvalued?
🟢 UNDERVALUED

UNM trades at $77.39 vs. our DCF-derived intrinsic value of $187.69, implying +139% upside. At a 10.0% WACC and 12.5% projected FCF growth, the market appears to be underpricing the present value of UNM's future cash flows. The bear case ($124.93) still suggests upside, providing margin of safety.

What is UNM's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.78B, projected at 12.5% 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 $3.58B net debt and dividing by 0.19B shares: Bear $124.93 | Base $187.69 | Bull $275.05. Current price $77.39 implies +139% to base case.

How is UNM's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 12.5% 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 ($38.88B).

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: 21.9x.