Using an unlevered Free Cash Flow to Firm (FCFF) model, we project American International Group, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 9.0% to -10.0% 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 728, DPO 111, DIO 60). At a 7.5% WACC with mid-year discounting, the terminal value (105% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 7.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $22.19 per share, suggesting AIG is overvalued by 70.2% at the current price of $74.48.
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 | 2,435 | 2,620 | 2,720 | 2,448 | 2,203 | 2,258 |
| (−) Net Interest | 557 | 599 | 622 | 560 | 504 | 516 |
| (+) D&A | 0 | 292 | 606 | 932 | 1,225 | 1,255 |
| EBITDA | 2,992 | 3,510 | 3,948 | 3,939 | 3,932 | 4,030 |
| (−) Tax | 470 | 505 | 525 | 472 | 425 | — |
| (−) CapEx | 1,459 | 1,569 | 1,630 | 1,467 | 1,320 | — |
| (−) ΔWC | 11,634 | 4,190 | 2,286 | -6,179 | -5,561 | — |
| Free Cash Flow (FCF) | -10,571 | -2,754 | -493 | 8,180 | 7,748 | — |
| Peers' EBITDA Multiple | 7.7x | |||||
| Terminal Value | 31,114 | |||||
| WACC / Discount Rate | 7.47% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -10,197 | -2,472 | -412 | 6,357 | 5,604 | 21,706 |
| Enterprise Value | 20,586 | |||||
| Projection Period | -1,120 | -5.4% | ||||
| Terminal Value | 21,706 | 105.4% | ||||
| (−) Current Net Debt | 7,917 | |||||
| Equity Value | 12,669 | |||||
| (÷) Outstanding Shares | 570M | |||||
| Fair Price | $22 | -70.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 3.7x | 5.7x | 7.7x | 9.7x | 11.7x |
|---|---|---|---|---|---|
| 5.5% | $6 | $16 | $27 | $38 | $49 |
| 6.5% | $4 | $14 | $25 | $35 | $45 |
| 7.5% | $2 | $12 | $22 | $32 | $42 |
| 8.5% | $1 | $10 | $20 | $29 | $39 |
| 9.5% | $0 | $9 | $18 | $27 | $36 |
Current price: $74.48. 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.