What is CB's Intrinsic value?

Chubb Ltd (CB) Intrinsic Value Analysis

Executive Summary

As of May 29, 2025, Chubb Ltd's estimated intrinsic value ranges from $285.56 to $433.53 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $433.53 +50.0%
Dividend Discount Model (Stable) $285.56 -1.2%

Is Chubb Ltd (CB) undervalued or overvalued?

With the current market price at $289.00, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Chubb Ltd's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.57 0.61
Cost of equity 6.5% 8.3%
Cost of debt 5.0% 5.0%
Tax rate 14.3% 15.4%
Debt/Equity ratio 0.14 0.14
After-tax WACC 6.2% 7.8%

Valuation Methods

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 17.2%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 7.4%
  • Long-term growth rate: 1.0%
  • Fair value: $433.53 (50.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 8.3% (Low) to 6.5% (High)
  • Long-term growth rate: 0.5% (Low) to 1.5% (High)
  • Fair value range: $190 to $381
  • Selected fair value: $285.56 (-1.2% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $115811M
Enterprise Value $128488M
Trailing P/E 13.69
Forward P/E 11.15
Trailing EV/EBITDA 0.00
Current Dividend Yield 126.73%
Dividend Growth Rate (5Y) 0.85%
Debt-to-Equity Ratio 0.14

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Dividend Discount Model (Multi-Stage) 57% $86.71
Dividend Discount Model (Stable) 43% $42.83
Weighted Average 100% $370.11

Investment Conclusion

Based on our comprehensive valuation analysis, Chubb Ltd's weighted average intrinsic value is $370.11, which is approximately 28.1% above the current market price of $289.00.

Key investment considerations:

  • Conservative capital structure (Debt/Equity of 0.14)
  • Historical dividend growth of 0.85%

Given these factors, we believe Chubb Ltd is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.