DCF Studio

    GL · NYQ · Financial Services

    Globe Life Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 448.76

    Market price

    USD 173.42

    Implied upside

    +158.8%

    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.
    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedCapital expenditure runs at 1.3% of revenue against depreciation of 0.0%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    No usable EV/EBITDA (EBITDA is not positive), so the exit multiple falls back to 8x.

    Value Per Share

    Perpetuity growth
    USD 448.76+158.8%
    Exit multiple
    USD 377.85+117.9%
    Market price
    USD 173.42

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 6.3bnUSD 6.6bnUSD 6.9bnUSD 7.2bnUSD 7.5bn+4.7%
    EBITUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.6bnUSD 1.7bn+4.7%
    NOPATUSD 1.1bnUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.4bn+4.7%
    Add depreciation & amortisationUSD 0.00USD 0.00USD 0.00USD 0.00USD 0.00-
    Less capital expenditureUSD -79.2mUSD -82.9mUSD -86.8mUSD -90.9mUSD -95.1m+4.7%
    Less increase in working capitalUSD 280.1mUSD 293.2mUSD 306.9mUSD 321.3mUSD 336.3m-4.7%
    Free cashflow to firmUSD 1.3bnUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.6bn+4.7%
    Discount factor0.96310.89330.82850.76840.7127-
    Present valueUSD 1.3bnUSD 1.3bnUSD 1.2bnUSD 1.2bnUSD 1.1bn-2.9%
    Present Value Of The ForecastUSD 6.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.640Reported 0.462, pulled toward 1.0 (Blume)
    Cost of equity8.52%Risk-free + beta x equity risk premium
    Cost of debt5.26%Interest expense / average total debt
    Market capitalisationUSD 13.3bn83.5% of capital
    Total debtUSD 2.6bn16.5% of capital, book value as a proxy
    Tax rate19.0%Effective, capped at statutory
    WACC7.82%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 448.76

    72% of EV

    Forecast FCFF, final year
    USD 1.6bn
    Capex at depreciation, working capital in reinvestment
    USD 1.4bn
    Less reinvestment at g/ROIC (17.7% of NOPAT)
    USD -243.4m
    Capitalised
    USD 1.1bn
    ROIC (reported)
    14.1%
    Terminal value, undiscounted
    USD 21.8bn
    Terminal value, discounted
    USD 15.5bn
    Enterprise value
    USD 21.6bn
    Less net debt
    USD -15.4bn
    Equity value
    USD 37.0bn

    Exit at 8.0x EBITDA

    Value per shareUSD 377.85

    61% of EV

    Terminal value, undiscounted
    USD 13.5bn
    Terminal value, discounted
    USD 9.7bn
    Enterprise value
    USD 15.8bn
    Less net debt
    USD -15.4bn
    Equity value
    USD 31.2bn

    Spread between methods: 17%.

    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%
    5.82%535.18559.96592.06635.41697.27
    6.82%473.34487.09503.92525.04552.40
    7.82%430.98439.14448.76460.29474.39
    8.82%400.10405.15410.93417.63425.52
    9.82%376.58379.77383.33387.36391.97

    Outlined: this model. Green text: above today's price of 173.42. 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 year4.7%-32.1%-36.8pp
    EBIT margin22.5%-8.8%-31.2pp
    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.