Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The Travelers Companies, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -7.8% to 8.8% 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 179, DPO 49, DIO 60). At a 7.7% WACC with mid-year discounting, the terminal value (93% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 8.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $257.57 per share, suggesting TRV is fairly valued by 11.5% at the current price of $291.14.
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 | 6,685 | 6,892 | 7,157 | 7,788 | 8,475 | 8,687 |
| (−) Net Interest | 410 | 422 | 439 | 477 | 519 | 532 |
| (+) D&A | 0 | 450 | 914 | 1,396 | 1,920 | 1,968 |
| EBITDA | 7,095 | 7,765 | 8,509 | 9,661 | 10,915 | 11,188 |
| (−) Tax | 1,108 | 1,142 | 1,186 | 1,290 | 1,404 | — |
| (−) CapEx | 2,250 | 2,320 | 2,409 | 2,622 | 2,853 | — |
| (−) ΔWC | 11,717 | 714 | 911 | 2,176 | 2,368 | — |
| Free Cash Flow (FCF) | -7,980 | 3,588 | 4,003 | 3,573 | 4,289 | — |
| Peers' EBITDA Multiple | 8.1x | |||||
| Terminal Value | 90,286 | |||||
| WACC / Discount Rate | 7.68% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -7,690 | 3,211 | 3,327 | 2,758 | 3,075 | 62,374 |
| Enterprise Value | 67,055 | |||||
| Projection Period | 4,681 | 7.0% | ||||
| Terminal Value | 62,374 | 93.0% | ||||
| (−) Current Net Debt | 8,425 | |||||
| Equity Value | 58,630 | |||||
| (÷) Outstanding Shares | 228M | |||||
| Fair Price | $258 | -11.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 4.1x | 6.1x | 8.1x | 10.1x | 12.1x |
|---|---|---|---|---|---|
| 5.7% | $138 | $213 | $287 | $362 | $436 |
| 6.7% | $130 | $201 | $272 | $343 | $414 |
| 7.7% | $122 | $190 | $258 | $325 | $393 |
| 8.7% | $114 | $179 | $244 | $309 | $374 |
| 9.7% | $107 | $169 | $231 | $293 | $355 |
Current price: $291.14. 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.