DCF Studio

    ZURN.SW · EBS · Financial Services

    Zurich Insurance Group AG

    Also onConsensus Drift

    Implied value per share

    CHF 13822.11

    Market price

    CHF 596.60

    Implied upside

    +2216.8%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 0.8218

    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.
    Wrong toolThis model values the shares at 23.2x the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.
    AdjustedReports in USD, trades in CHF. Modelled in USD, converted at the end.
    AdjustedReported capital expenditure averages just 0.68% 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 1.20% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.
    NoteRisk-free rate is an assumption: CHF assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    CHF 13822.11+2216.8%
    Exit multiple
    CHF 2667.42+347.1%
    Market price
    CHF 596.60

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn40bn81bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 111.4bnUSD 139.9bnUSD 175.6bnUSD 220.6bnUSD 277.0bn+25.6%
    EBITUSD 11.5bnUSD 14.5bnUSD 18.2bnUSD 22.9bnUSD 28.7bn+25.6%
    NOPATUSD 9.8bnUSD 12.3bnUSD 15.5bnUSD 19.4bnUSD 24.4bn+25.6%
    Add depreciation & amortisationUSD 1.3bnUSD 1.7bnUSD 2.1bnUSD 2.7bnUSD 3.3bn+25.6%
    Less capital expenditureUSD -1.3bnUSD -1.7bnUSD -2.1bnUSD -2.7bnUSD -3.3bn+25.6%
    Less increase in working capitalUSD 22.7bnUSD 28.5bnUSD 35.8bnUSD 44.9bnUSD 56.4bn-25.6%
    Free cashflow to firmUSD 32.5bnUSD 40.8bnUSD 51.3bnUSD 64.4bnUSD 80.8bn+25.6%
    Discount factor0.98370.95190.92110.89130.8625-
    Present valueUSD 32.0bnUSD 38.8bnUSD 47.2bnUSD 57.4bnUSD 69.7bn+21.5%
    Present Value Of The ForecastUSD 245.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate0.50%CHF assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.540Reported 0.314, pulled toward 1.0 (Blume)
    Cost of equity3.47%Risk-free + beta x equity risk premium
    Cost of debt3.06%Interest expense / average total debt
    Market capitalisationUSD 89.1bn85.0% of capital
    Total debtUSD 15.7bn15.0% of capital, book value as a proxy
    Tax rate15.0%Effective, capped at statutory
    WACC3.34%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 16819.11

    90% of EV

    Forecast FCFF, final year
    USD 80.8bn
    Capex at depreciation, working capital in reinvestment
    USD 24.4bn
    Less reinvestment at g/ROIC (15.2% of NOPAT)
    USD -3.7bn
    Capitalised
    USD 20.7bn
    ROIC (reported)
    16.5%
    Terminal value, undiscounted
    USD 2521.5bn
    Terminal value, discounted
    USD 2174.8bn
    Enterprise value
    USD 2419.9bn
    Less net debt
    USD -2.3bn
    Equity value
    USD 2422.2bn

    Exit at 8.0x EBITDA

    Value per shareUSD 3245.79

    47% of EV

    Terminal value, undiscounted
    USD 255.1bn
    Terminal value, discounted
    USD 220.0bn
    Enterprise value
    USD 465.1bn
    Less net debt
    USD -2.3bn
    Equity value
    USD 467.5bn

    Spread between methods: 135%.

    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%
    1.34%—————
    2.34%18506.3041855.77———
    3.34%9038.6211480.1216818.7437790.97—
    4.34%6214.417026.828278.1710459.3615228.46
    5.34%4846.115221.915728.556449.867560.72

    Outlined: this model. Green text: above today's price of 725.96. 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 year25.6%-26.3%-51.9pp
    EBIT margin10.4%-9.7%-20.0pp
    Discount rate3.3%51.0%+47.7pp
    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.