Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Brown & Brown, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 20.5% to 18.2% 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 213, DPO 147, DIO 60). At a 7.1% WACC with mid-year discounting, the terminal value (81% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 11.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $177.84 per share, suggesting BRO is undervalued by 173.1% at the current price of $65.13.
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 | 3,367 | 3,597 | 3,828 | 4,526 | 5,351 | 5,485 |
| (−) Net Interest | 291 | 310 | 330 | 391 | 462 | 473 |
| (+) D&A | 63 | 76 | 88 | 99 | 111 | 114 |
| EBITDA | 3,721 | 3,984 | 4,246 | 5,015 | 5,924 | 6,072 |
| (−) Tax | 779 | 832 | 886 | 1,047 | 1,238 | — |
| (−) CapEx | 107 | 114 | 122 | 144 | 170 | — |
| (−) ΔWC | 826 | 235 | 235 | 712 | 842 | — |
| Free Cash Flow (FCF) | 2,009 | 2,802 | 3,004 | 3,112 | 3,673 | — |
| Peers' EBITDA Multiple | 11.7x | |||||
| Terminal Value | 70,980 | |||||
| WACC / Discount Rate | 7.10% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,941 | 2,528 | 2,531 | 2,448 | 2,698 | 50,378 |
| Enterprise Value | 62,524 | |||||
| Projection Period | 12,146 | 19.4% | ||||
| Terminal Value | 50,378 | 80.6% | ||||
| (−) Current Net Debt | 6,839 | |||||
| Equity Value | 55,685 | |||||
| (÷) Outstanding Shares | 313M | |||||
| Fair Price | $178 | +173.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 7.7x | 9.7x | 11.7x | 13.7x | 15.7x |
|---|---|---|---|---|---|
| 5.1% | $135 | $165 | $196 | $226 | $256 |
| 6.1% | $129 | $158 | $187 | $215 | $244 |
| 7.1% | $123 | $150 | $178 | $205 | $233 |
| 8.1% | $117 | $143 | $170 | $196 | $222 |
| 9.1% | $112 | $137 | $162 | $187 | $212 |
Current price: $65.13. 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.