DCF Studio

    IFC.TO · TOR · Financial Services

    Intact Financial Corporation

    Also onConsensus Drift

    Implied value per share

    CAD 565.29

    Market price

    CAD 258.34

    Implied upside

    +118.8%

    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.
    NoteRisk-free rate is an assumption: CAD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    CAD 565.29+118.8%
    Exit multiple
    CAD 309.40+19.8%
    Market price
    CAD 258.34

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CAD). Outflows negative.

    0bn2bn4bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCAD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCAD 27.4bnCAD 28.7bnCAD 30.2bnCAD 31.7bnCAD 33.2bn+5.0%
    EBITCAD 3.4bnCAD 3.5bnCAD 3.7bnCAD 3.9bnCAD 4.1bn+5.0%
    NOPATCAD 2.7bnCAD 2.8bnCAD 2.9bnCAD 3.1bnCAD 3.2bn+5.0%
    Add depreciation & amortisationCAD 754.3mCAD 791.8mCAD 831.2mCAD 872.6mCAD 916.0m+5.0%
    Less capital expenditureCAD -496.8mCAD -521.5mCAD -547.4mCAD -574.6mCAD -603.2m+5.0%
    Less increase in working capitalCAD 725.1mCAD 761.2mCAD 799.1mCAD 838.8mCAD 880.5m-5.0%
    Free cashflow to firmCAD 3.6bnCAD 3.8bnCAD 4.0bnCAD 4.2bnCAD 4.4bn+5.0%
    Discount factor0.97190.91810.86730.81930.7740-
    Present valueCAD 3.5bnCAD 3.5bnCAD 3.5bnCAD 3.5bnCAD 3.4bn-0.8%
    Present Value Of The ForecastCAD 17.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.30%CAD assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.518Reported 0.281, pulled toward 1.0 (Blume)
    Cost of equity6.15%Risk-free + beta x equity risk premium
    Cost of debt4.20%Interest expense / average total debt
    Market capitalisationCAD 45.6bn89.7% of capital
    Total debtCAD 5.3bn10.3% of capital, book value as a proxy
    Tax rate20.8%Effective, capped at statutory
    WACC5.86%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 shareCAD 565.29

    80% of EV

    Forecast FCFF, final year
    CAD 4.4bn
    Capex at depreciation, working capital in reinvestment
    CAD 3.8bn
    Less reinvestment at g/ROIC (21.6% of NOPAT)
    CAD -814.3m
    Capitalised
    CAD 3.0bn
    ROIC (reported)
    11.6%
    Terminal value, undiscounted
    CAD 90.4bn
    Terminal value, discounted
    CAD 69.9bn
    Enterprise value
    CAD 87.4bn
    Less net debt
    CAD -13.5bn
    Equity value
    CAD 100.9bn

    Exit at 6.3x EBITDA

    Value per shareCAD 309.40

    58% of EV

    Terminal value, undiscounted
    CAD 31.3bn
    Terminal value, discounted
    CAD 24.3bn
    Enterprise value
    CAD 41.7bn
    Less net debt
    CAD -13.5bn
    Equity value
    CAD 55.2bn

    Spread between methods: 59%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    3.86%846.55988.321233.921764.833776.16
    4.86%625.29680.23758.14877.591084.46
    5.86%505.34531.52565.30610.64674.91
    6.86%429.97443.80460.64481.67508.75
    7.86%378.17385.83394.80405.49418.47

    Outlined: this model. Green text: above today's price of 258.34. 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 year5.0%-11.5%-16.5pp
    EBIT margin12.3%3.0%-9.3pp
    Discount rate5.9%12.8%+6.9pp
    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.