...

White Mountains Insurance Group, Ltd. (WTM) Intrinsic Value

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

Popular:

White Mountains Insurance Group, Ltd. (WTM)

View Full Profile →

Intrinsic Value (DCF)

Current$2,061.92
→
Intrinsic$2,685.64
+30%
$1,790.48$2,685.64$4,384.86
Market implies 15% growth for 5 years
DCF analysis suggests WTM could have 30% upside at 21% growth — verify assumptions match your view.
At $2062, the market prices in continued high-teens cash flow growth (15%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $1790 → Bull $4385. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →17%19%21%23%
8%$3309$3592$3894$4216
10%$2286$2479$2686$2905
12%$1719$1864$2018$2181
14%$1361$1474$1595$1723

Bull Case

  • Bull case ($4385) offers 113% upside at 26% growth, 9% discount
  • 23% margin of safety vs. base case estimate
  • Market-implied growth (15%) ≤ historical CAGR (21%)

Bear Case

  • Bear case ($1790) implies 13% downside at 17% growth, 12% discount
  • Using 21% growth — aggressive, watch for mean reversion
Loading charts...

5-Year Net Income Projection

Year 1$279.67M
Year 2$339.48M
Year 3$412.07M
Year 4$500.19M
Year 5$607.15M
Terminal$8.93B

📐 Model Inputs

Growth Rate21.4%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$230.40MTTM 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.

Related Analysis

Full Stock ProfileCompare WTM vs BRK.BStock Screener

Frequently Asked Questions

Is WTM stock undervalued or overvalued?
🟢 UNDERVALUED

WTM trades at $2061.92 vs. our DCF-derived intrinsic value of $2541.37, implying +24% upside. At a 10.0% WACC and 21.4% projected FCF growth, the market appears to be underpricing the present value of WTM's future cash flows. The bear case ($1624.71) still suggests upside, providing margin of safety.

What is WTM's intrinsic value?

Using a 5-year DCF model: Base FCF of $230M, projected at 21.4% 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 $310M net debt and dividing by 0.00B shares: Bear $1624.71 | Base $2541.37 | Bull $3891.22. Current price $2061.92 implies +24% to base case.

How is WTM's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 21.4% 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 ($6.74B).

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.