Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Cincinnati Financial Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -15.4% to 7.0% 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 132, DPO 30, DIO 60). At a 7.8% WACC with mid-year discounting, the terminal value (73% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 10.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $368.42 per share, suggesting CINF is undervalued by 134.4% at the current price of $157.18.
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 | 4,291 | 4,563 | 4,884 | 5,227 | 5,594 | 5,734 |
| (−) Net Interest | 51 | 55 | 59 | 63 | 67 | 69 |
| (+) D&A | 18 | 19 | 20 | 21 | 21 | 22 |
| EBITDA | 4,361 | 4,637 | 4,962 | 5,311 | 5,683 | 5,825 |
| (−) Tax | 840 | 893 | 956 | 1,023 | 1,095 | — |
| (−) CapEx | 20 | 21 | 22 | 24 | 26 | — |
| (−) ΔWC | 163 | 275 | 324 | 347 | 372 | — |
| Free Cash Flow (FCF) | 3,339 | 3,448 | 3,660 | 3,917 | 4,191 | — |
| Peers' EBITDA Multiple | 10.6x | |||||
| Terminal Value | 61,510 | |||||
| WACC / Discount Rate | 7.80% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 3,216 | 3,081 | 3,034 | 3,011 | 2,989 | 42,254 |
| Enterprise Value | 57,584 | |||||
| Projection Period | 15,331 | 26.6% | ||||
| Terminal Value | 42,254 | 73.4% | ||||
| (−) Current Net Debt | (545) | |||||
| Equity Value | 58,129 | |||||
| (÷) Outstanding Shares | 158M | |||||
| Fair Price | $368 | +134.4% | ||||
| WACC \ EV/EBITDA Exit Multiple | 6.6x | 8.6x | 10.6x | 12.6x | 14.6x |
|---|---|---|---|---|---|
| 5.8% | $288 | $344 | $399 | $455 | $511 |
| 6.8% | $277 | $330 | $383 | $437 | $490 |
| 7.8% | $267 | $318 | $368 | $419 | $470 |
| 8.8% | $257 | $306 | $354 | $403 | $451 |
| 9.8% | $248 | $294 | $341 | $387 | $433 |
Current price: $157.18. 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.