Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Principal Financial Group, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 8.9% to 2.0% 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 370, DPO 1149, DIO 60). At a 6.9% WACC with mid-year discounting, the terminal value (53% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 7.3x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $413.09 per share, suggesting PFG is undervalued by 363.8% at the current price of $89.06.
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 | 7,518 | 7,884 | 8,286 | 8,960 | 9,140 | 9,369 |
| (−) Net Interest | 2 | 2 | 2 | 2 | 2 | 2 |
| (+) D&A | 103 | 100 | 101 | 105 | 119 | 122 |
| EBITDA | 7,623 | 7,986 | 8,389 | 9,068 | 9,262 | 9,493 |
| (−) Tax | 1,064 | 1,116 | 1,173 | 1,269 | 1,294 | — |
| (−) CapEx | 114 | 120 | 126 | 136 | 139 | — |
| (−) ΔWC | -12,437 | -416 | -456 | -766 | -205 | — |
| Free Cash Flow (FCF) | 18,882 | 7,166 | 7,545 | 8,429 | 8,033 | — |
| Peers' EBITDA Multiple | 7.3x | |||||
| Terminal Value | 68,827 | |||||
| WACC / Discount Rate | 6.93% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 18,260 | 6,481 | 6,382 | 6,668 | 5,943 | 49,244 |
| Enterprise Value | 92,979 | |||||
| Projection Period | 43,735 | 47.0% | ||||
| Terminal Value | 49,244 | 53.0% | ||||
| (−) Current Net Debt | (227) | |||||
| Equity Value | 93,206 | |||||
| (÷) Outstanding Shares | 226M | |||||
| Fair Price | $413 | +363.7% | ||||
| WACC \ EV/EBITDA Exit Multiple | 3.3x | 5.3x | 7.3x | 9.3x | 11.3x |
|---|---|---|---|---|---|
| 4.9% | $310 | $376 | $442 | $508 | $574 |
| 5.9% | $301 | $364 | $427 | $490 | $553 |
| 6.9% | $293 | $353 | $413 | $473 | $533 |
| 7.9% | $285 | $342 | $400 | $457 | $515 |
| 8.9% | $277 | $332 | $387 | $442 | $497 |
Current price: $89.06. 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.