DCF Studio

    MET · NYQ · Financial Services

    MetLife, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 262.24

    Market price

    USD 97.04

    Implied upside

    +170.2%

    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 0.00% 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 1.02% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.

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

    Value Per Share

    Perpetuity growth
    USD 262.24+170.2%
    Exit multiple
    USD 257.76+165.6%
    Market price
    USD 97.04

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn4bn8bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 78.6bnUSD 81.7bnUSD 84.9bnUSD 88.2bnUSD 91.7bn+3.9%
    EBITUSD 5.3bnUSD 5.5bnUSD 5.7bnUSD 5.9bnUSD 6.1bn+3.9%
    NOPATUSD 4.2bnUSD 4.3bnUSD 4.5bnUSD 4.7bnUSD 4.9bn+3.9%
    Add depreciation & amortisationUSD 799.7mUSD 831.1mUSD 863.7mUSD 897.5mUSD 932.7m+3.9%
    Less capital expenditureUSD -799.7mUSD -831.1mUSD -863.7mUSD -897.5mUSD -932.7m+3.9%
    Less increase in working capitalUSD 2.9bnUSD 3.0bnUSD 3.1bnUSD 3.2bnUSD 3.4bn-3.9%
    Free cashflow to firmUSD 7.1bnUSD 7.3bnUSD 7.6bnUSD 7.9bnUSD 8.2bn+3.9%
    Discount factor0.96090.88720.81920.75640.6984-
    Present valueUSD 6.8bnUSD 6.5bnUSD 6.2bnUSD 6.0bnUSD 5.7bn-4.0%
    Present Value Of The ForecastUSD 31.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.839Reported 0.759, pulled toward 1.0 (Blume)
    Cost of equity9.61%Risk-free + beta x equity risk premium
    Cost of debt5.46%Interest expense / average total debt
    Market capitalisationUSD 61.7bn75.3% of capital
    Total debtUSD 20.2bn24.7% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.30%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 262.24

    58% of EV

    Forecast FCFF, final year
    USD 8.2bn
    Capex at depreciation, working capital in reinvestment
    USD 4.9bn
    Less reinvestment at g/ROIC (29.1% of NOPAT)
    USD -1.4bn
    Capitalised
    USD 3.4bn
    ROIC (reported)
    8.6%
    Terminal value, undiscounted
    USD 60.8bn
    Terminal value, discounted
    USD 42.5bn
    Enterprise value
    USD 73.7bn
    Less net debt
    USD -98.1bn
    Equity value
    USD 171.9bn

    Exit at 8.0x EBITDA

    Value per shareUSD 257.76

    56% of EV

    Terminal value, undiscounted
    USD 56.6bn
    Terminal value, discounted
    USD 39.5bn
    Enterprise value
    USD 70.8bn
    Less net debt
    USD -98.1bn
    Equity value
    USD 168.9bn

    Spread between methods: 2%.

    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%
    6.30%297.79301.98307.19313.88322.84
    7.30%276.39278.13280.16282.58285.57
    8.30%261.14261.67262.24262.86263.54
    9.30%250.53250.80251.07251.33251.60
    10.30%242.31242.54242.77243.00243.23

    Outlined: this model. Green text: above today's price of 97.04. 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 year3.9%-26.3%-30.2pp
    EBIT margin6.7%-17.2%-23.9pp
    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.