Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Prudential Financial, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -4.6% to -3.9% 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 200, DPO 129, DIO 60). At a 7.3% 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 $159.44 per share, suggesting PRU is undervalued by 67.6% at the current price of $95.12.
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 | 5,909 | 6,093 | 6,212 | 6,758 | 6,497 | 6,659 |
| (−) Net Interest | 403 | 415 | 424 | 461 | 443 | 454 |
| (+) D&A | 147 | 120 | 244 | 370 | 507 | 520 |
| EBITDA | 6,460 | 6,629 | 6,879 | 7,588 | 7,447 | 7,633 |
| (−) Tax | 1,108 | 1,143 | 1,165 | 1,267 | 1,218 | — |
| (−) CapEx | 600 | 618 | 630 | 686 | 659 | — |
| (−) ΔWC | -4,839 | 756 | 490 | 2,245 | -1,074 | — |
| Free Cash Flow (FCF) | 9,590 | 4,111 | 4,594 | 3,390 | 6,643 | — |
| Peers' EBITDA Multiple | 8.4x | |||||
| Terminal Value | 64,039 | |||||
| WACC / Discount Rate | 7.29% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 9,258 | 3,699 | 3,853 | 2,650 | 4,839 | 45,040 |
| Enterprise Value | 69,340 | |||||
| Projection Period | 24,300 | 35.0% | ||||
| Terminal Value | 45,040 | 65.0% | ||||
| (−) Current Net Debt | 13,568 | |||||
| Equity Value | 55,772 | |||||
| (÷) Outstanding Shares | 350M | |||||
| Fair Price | $159 | +67.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 4.4x | 6.4x | 8.4x | 10.4x | 12.4x |
|---|---|---|---|---|---|
| 5.3% | $108 | $141 | $175 | $209 | $242 |
| 6.3% | $103 | $135 | $167 | $199 | $231 |
| 7.3% | $98 | $129 | $159 | $190 | $221 |
| 8.3% | $94 | $123 | $152 | $182 | $211 |
| 9.3% | $90 | $118 | $145 | $173 | $201 |
Current price: $95.12. 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.