Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Aflac Incorporated's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -2.3% to -5.2% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 14, DPO 30, DIO 60). At a 7.5% WACC with mid-year discounting, the terminal value (65% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 8.4x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $225.17 per share, suggesting AFL is undervalued by 108.8% at the current price of $107.85.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 12,043 | 12,228 | 12,335 | 12,995 | 12,326 | 12,634 |
| (−) Net Interest | 191 | 194 | 196 | 206 | 196 | 201 |
| (+) D&A | 0 | 170 | 343 | 518 | 702 | 719 |
| EBITDA | 12,234 | 12,592 | 12,874 | 13,719 | 13,223 | 13,554 |
| (−) Tax | 1,788 | 1,815 | 1,831 | 1,929 | 1,830 | — |
| (−) CapEx | 852 | 865 | 872 | 919 | 872 | — |
| (−) ΔWC | 170 | 15 | 9 | 55 | -56 | — |
| Free Cash Flow (FCF) | 9,425 | 9,897 | 10,161 | 10,816 | 10,577 | — |
| Peers' EBITDA Multiple | 8.4x | |||||
| Terminal Value | 113,716 | |||||
| WACC / Discount Rate | 7.45% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 9,092 | 8,885 | 8,490 | 8,411 | 7,655 | 79,389 |
| Enterprise Value | 121,922 | |||||
| Projection Period | 42,533 | 34.9% | ||||
| Terminal Value | 79,389 | 65.1% | ||||
| (−) Current Net Debt | 2,164 | |||||
| Equity Value | 119,758 | |||||
| (÷) Outstanding Shares | 532M | |||||
| Fair Price | $225 | +108.7% | ||||
| WACC \ EV/EBITDA Exit Multiple | 4.4x | 6.4x | 8.4x | 10.4x | 12.4x |
|---|---|---|---|---|---|
| 5.5% | $165 | $205 | $244 | $283 | $322 |
| 6.5% | $160 | $197 | $234 | $271 | $309 |
| 7.5% | $154 | $190 | $225 | $261 | $296 |
| 8.5% | $149 | $183 | $217 | $251 | $285 |
| 9.5% | $144 | $176 | $209 | $241 | $273 |
Current price: $107.85. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.