What is PRI's Intrinsic value?

Primerica Inc (PRI) Intrinsic Value Analysis

Executive Summary

As of May 29, 2025, Primerica Inc's estimated intrinsic value ranges from $216.80 to $286.17 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $216.80 -19.2%
Dividend Discount Model (Stable) $286.17 +6.6%

Is Primerica Inc (PRI) undervalued or overvalued?

With the current market price at $268.33, the stock appears to be fairly valued.

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 Primerica Inc'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 0.7 0.97
Cost of equity 7.1% 10.3%
Cost of debt 5.0% 5.0%
Tax rate 23.4% 23.6%
Debt/Equity ratio 0.22 0.22
After-tax WACC 6.5% 9.2%

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: 19.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.7%
  • Long-term growth rate: 2.0%
  • Fair value: $216.80 (-19.2% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.3% (Low) to 7.1% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $145 to $427
  • Selected fair value: $286.17 (6.6% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $8879M
Enterprise Value $10134M
Trailing P/E 13.88
Forward P/E 17.33
Trailing EV/EBITDA 0.00
Current Dividend Yield 137.51%
Dividend Growth Rate (5Y) 15.09%
Debt-to-Equity Ratio 0.22

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% $43.36
Dividend Discount Model (Stable) 43% $42.93
Weighted Average 100% $246.53

Investment Conclusion

Based on our comprehensive valuation analysis, Primerica Inc's weighted average intrinsic value is $246.53, which is approximately 8.1% below the current market price of $268.33.

Key investment considerations:

  • Conservative capital structure (Debt/Equity of 0.22)
  • Historical dividend growth of 15.09%

Given these factors, we believe Primerica Inc is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.