What is ZURN.SW's Intrinsic value?

Zurich Insurance Group AG (ZURN.SW) Intrinsic Value Analysis

Executive Summary

As of June 18, 2025, Zurich Insurance Group AG's estimated intrinsic value ranges from $492.43 to $605.91 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $605.91 +8.7%
Dividend Discount Model (Stable) $492.43 -11.7%

Is Zurich Insurance Group AG (ZURN.SW) undervalued or overvalued?

With the current market price at $557.40, 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 Zurich Insurance Group AG'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 1.0% 1.5%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.84 0.89
Cost of equity 5.3% 7.4%
Cost of debt 5.0% 5.0%
Tax rate 25.3% 26.2%
Debt/Equity ratio 0.14 0.14
After-tax WACC 5.1% 7.0%

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: 71.5%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 6.3%
  • Long-term growth rate: 0.5%
  • Fair value: $605.91 (8.7% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 7.4% (Low) to 5.3% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $374 to $840
  • Selected fair value: $492.43 (-11.7% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $81581M
Enterprise Value $86549M
Trailing P/E 17.30
Forward P/E 16.21
Trailing EV/EBITDA 0.00
Current Dividend Yield 410.50%
Dividend Growth Rate (5Y) 7.78%
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% $121.18
Dividend Discount Model (Stable) 43% $73.86
Weighted Average 100% $557.28

Investment Conclusion

Based on our comprehensive valuation analysis, Zurich Insurance Group AG's weighted average intrinsic value is $557.28, which is approximately 0.0% below the current market price of $557.40.

Key investment considerations:

  • Conservative capital structure (Debt/Equity of 0.14)
  • Historical dividend growth of 7.78%

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