DCF Studio

    ALL · NYQ · Financial Services

    The Allstate Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 414.56

    Market price

    USD 249.83

    Implied upside

    +65.9%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    AdjustedReported capital expenditure averages just 0.49% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.13% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    USD 414.56+65.9%
    Exit multiple
    USD 228.14-8.7%
    Market price
    USD 249.83

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn5bn10bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 73.7bnUSD 80.9bnUSD 88.9bnUSD 97.6bnUSD 107.2bn+9.8%
    EBITUSD 4.5bnUSD 4.9bnUSD 5.4bnUSD 6.0bnUSD 6.6bn+9.8%
    NOPATUSD 3.6bnUSD 3.9bnUSD 4.3bnUSD 4.7bnUSD 5.2bn+9.8%
    Add depreciation & amortisationUSD 830.5mUSD 912.2mUSD 1.0bnUSD 1.1bnUSD 1.2bn+9.8%
    Less capital expenditureUSD -830.5mUSD -912.2mUSD -1.0bnUSD -1.1bnUSD -1.2bn+9.8%
    Less increase in working capitalUSD 3.4bnUSD 3.8bnUSD 4.1bnUSD 4.5bnUSD 5.0bn-9.8%
    Free cashflow to firmUSD 7.0bnUSD 7.7bnUSD 8.4bnUSD 9.2bnUSD 10.2bn+9.8%
    Discount factor0.96670.90330.84410.78880.7371-
    Present valueUSD 6.7bnUSD 6.9bnUSD 7.1bnUSD 7.3bnUSD 7.5bn+2.6%
    Present Value Of The ForecastUSD 35.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.430Reported 0.150, pulled toward 1.0 (Blume)
    Cost of equity7.37%Risk-free + beta x equity risk premium
    Cost of debt5.12%Interest expense / average total debt
    Market capitalisationUSD 63.2bn89.4% of capital
    Total debtUSD 7.5bn10.6% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.01%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 414.56

    68% of EV

    Forecast FCFF, final year
    USD 10.2bn
    Capex at depreciation, working capital in reinvestment
    USD 5.2bn
    Less reinvestment at g/ROIC (11.0% of NOPAT)
    USD -571.2m
    Capitalised
    USD 4.6bn
    ROIC (reported)
    22.7%
    Terminal value, undiscounted
    USD 104.6bn
    Terminal value, discounted
    USD 77.1bn
    Enterprise value
    USD 112.7bn
    Less net debt
    USD 1.9bn
    Equity value
    USD 110.7bn

    Exit at 4.8x EBITDA

    Value per shareUSD 228.14

    43% of EV

    Terminal value, undiscounted
    USD 37.1bn
    Terminal value, discounted
    USD 27.3bn
    Enterprise value
    USD 62.9bn
    Less net debt
    USD 1.9bn
    Equity value
    USD 60.9bn

    Spread between methods: 58%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.01%552.08612.48696.77822.741031.68
    6.01%442.12474.48515.96571.10648.03
    7.01%371.51390.93414.57444.02481.77
    8.01%322.17334.69349.41367.02388.46
    9.01%285.63294.10303.84315.15328.45

    Outlined: this model. Green text: above today's price of 249.83. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year9.8%1.5%-8.3pp
    EBIT margin6.1%3.3%-2.8pp
    Discount rate7.0%10.8%+3.8pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.