Thinking about investing in AIG? This in-depth stock analysis explores AIG’s valuation under bear, base, and bull case DCF models. We break down the upside potential, dividend sustainability, and share expert insights to help beginners and seasoned investors make informed decisions. Perfect for anyone learning about investing in stocks or searching for the best stock analysis sites in 2025.
DCF Valuation – Bear Case
Assumptions
- EBITDA Growth Rate: 2%
- Terminal Growth Rate: 1.5%
- Discount Rate: 9%
Valuation Outputs
- Sum of Present Values (2024–2029): $27,429M
- Terminal Value: $100,943M
- PV of Terminal Value: $65,606M
- Enterprise Value (EV): $93,035M
- Equity Value: $162,397M
- Fair Value Per Share: $273.43
DCF Valuation – Base Case
Assumptions
- EBITDA Growth Rate: 4%
- Terminal Growth Rate: 2.5%
- Discount Rate: 7.5%
Valuation Outputs
- Sum of Present Values (2024–2029): $29,970M
- Terminal Value: $166,031M
- PV of Terminal Value: $115,650M
- Enterprise Value (EV): $145,620M
- Equity Value: $215,982M
- Fair Value Per Share: $361.97
DCF Valuation – Bull Case
Assumptions
- EBITDA Growth Rate: 6%
- Terminal Growth Rate: 3.5%
- Discount Rate: 6.5%
Valuation Outputs
- Sum of Present Values (2024–2029): $32,350M
- Terminal Value: $303,273M
- PV of Terminal Value: $221,353M
- Enterprise Value (EV): $253,703M
- Equity Value: $323,065M
- Fair Value Per Share: $543.95
Valuation Summary and Upside Potential
| Case | Fair Value/Share | Upside from $79.51 |
|---|---|---|
| Bear | $273.43 | +244% |
| Base | $361.97 | +355% |
| Bull | $543.95 | +584% |
Across all scenarios, AIG appears significantly undervalued relative to its current market price. Even in the conservative bear case, the valuation suggests an impressive upside of over 240%.
Dividend Sustainability Analysis
- Dividend per Share: $1.60
- Free Cash Flow Used: $2,696M
- Dividend Payout Ratio: 0.34
A payout ratio of just 34% indicates that AIG’s dividend is well-covered by free cash flows. The company retains ample cash flow to reinvest in operations or return to shareholders via buybacks.
Summary View
- AIG offers a favorable risk-reward profile with substantial upside potential across all DCF scenarios.
- The company has a robust free cash flow profile, manageable debt, and an attractive dividend payout ratio.
- Market pessimism may be mispricing the stock based on legacy concerns, creating a compelling opportunity for long-term investors.
Valuation Range
- Bear Case: $273.43
- Base Case: $361.97
- Bull Case: $543.95
- Current Price: $79.51
With a valuation range between $273 and $543 per share, AIG appears to be trading at a substantial discount. The stock is priced for stagnation, while fundamentals suggest meaningful growth and capital return upside.
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