First Niagara Financial Group (First Niagara Financial Group) Intrinsic Value: DCF (FCF Based) : $10.39 (As of May. 05, 2024)

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What is First Niagara Financial Group Intrinsic Value: DCF (FCF Based)?

As of today (2024-05-05), First Niagara Financial Group's intrinsic value calculated from the Discounted Cash Flow model is $10.39.

Note: Discounted Cash Flow model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

First Niagara Financial Group's Predictability Rank is Not Rated. Thus, this page is only used for demonstration purposes and the DCF related results in the screener and portfolio will appear as zero.

Margin of Safety (FCF Based) using Discounted Cash Flow model for First Niagara Financial Group is 2.02%.

The industry rank for First Niagara Financial Group's Intrinsic Value: DCF (FCF Based) or its related term are showing as below:

FNFG's Price-to-DCF (FCF Based) is not ranked ^*
in the Banks industry.
Industry Median: 0.45
* Ranked among companies with meaningful Price-to-DCF (FCF Based) only.

First Niagara Financial Group Intrinsic Value: DCF (FCF Based) Historical Data

The historical data trend for First Niagara Financial Group's Intrinsic Value: DCF (FCF Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

First Niagara Financial Group Intrinsic Value: DCF (FCF Based) Chart

First Niagara Financial Group Annual Data

Trend

Dec06

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Dec09

Dec10

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Dec15

Intrinsic Value: DCF (FCF Based)

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First Niagara Financial Group Quarterly Data
	Sep11	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14	Dec14	Mar15	Jun15	Sep15	Dec15	Mar16	Jun16
Intrinsic Value: DCF (FCF Based)	Get a 7-Day Free Trial															-	-	-	-	-

Competitive Comparison of First Niagara Financial Group's Intrinsic Value: DCF (FCF Based)

For the Banks - Regional subindustry, First Niagara Financial Group's Price-to-DCF (FCF Based), along with its competitors' market caps and Price-to-DCF (FCF Based) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

First Niagara Financial Group's Price-to-DCF (FCF Based) Distribution in the Banks Industry

For the Banks industry and Financial Services sector, First Niagara Financial Group's Price-to-DCF (FCF Based) distribution charts can be found below:

* The bar in red indicates where First Niagara Financial Group's Price-to-DCF (FCF Based) falls into.

First Niagara Financial Group Intrinsic Value: DCF (FCF Based) Calculation

This is the intrinsic value calculated from the Discounted Cash Flow model with default parameters. In a discounted cash flow model, the future cash flow is estimated based on a cash flow growth rate and a discount rate. The cash flow of the future is discounted to its current value at the discount rate. All of the discounted future cash flow is added together to get the current intrinsic value of the company.

Usually a two-stage model is used when calculating a stock's intrinsic value using a discounted cash flow model. The first stage is called the growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DCF calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 11%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate and rounded up to the nearest integer. It is updated daily. The current risk-free rate is 4.50%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default. Then we added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 5%
The Growth Rate in the growth stage is initially set as the default 10-Year FCF Growth Rate (Per Share). In cases where the 10-year growth rate is unavailable, it defaults to using the 5-Year FCF Growth Rate (Per Share). If both the 10-year and 5-year growth rates are unavailable, the system defaults to the 3-Year FCF Growth Rate (Per Share).
However, it's important to note that there is a growth rate range. If the calculated growth rate exceeds 20%, it will be capped at 20%. Conversely, if the calculated growth rate falls below 5%, it will be adjusted to 5% to maintain a reasonable range.
=> First Niagara Financial Group's average Free Cash Flow Growth Rate in the past 3 years was 0.00%, which is less than 5%. GuruFocus defaults => Growth Rate: 5%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Years of Terminal Growth: y2 = 10

6. Free Cash Flow per Share: fcf = $0.900.
However, GuruFocus DCF calculator is actually a Discounted Earnings calculator, the EPS without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.

All of the default settings can be changed and the results are calculated automatically.

First Niagara Financial Group's Intrinsic Value: DCF (FCF Based) for today is calculated as

Intrinsic Value: DCF (FCF Based)	=	Free Cash Flow per Share	*	{[(1+g1)/(1+d)	+	(1+g1)^2/(1+d)^2	+	...	+	(1+g1)^10/(1+d)^10]
	+	(1+g1)^10/(1+d)^10	*	[(1+g2)/(1+d)	+	(1+g2)^2/(1+d)^2	+	...	+	(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.05)/(1+0.11) = 0.94594594594595
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.11) = 0.93693693693694

Intrinsic Value: DCF (FCF Based)

Free Cash Flow per Share

{[x

x^2

...

x^10]

x^10

y^2

...

y^10]}

Free Cash Flow per Share

(1-x^10)

(1-x)

x^10

(1-y^10)

(1-y)]

0.900

11.5406

10.39

Margin of Safety (FCF Based)	=	(Intrinsic Value: DCF (FCF Based)	-	Current Price)	/	Intrinsic Value: DCF (FCF Based)
	=	(10.39	-	10.18)	/	10.39
	=	2.02 %

First Niagara Financial Group (NAS:FNFG) Intrinsic Value: DCF (FCF Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book per Share, Graham Number, Median PS Value etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.

Be Aware

What you need to know about the DCF model:

1. The DCF model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that have relatively consistent performance.
4. The DCF model works poorly for inconsistent performers such as cyclicals.
5. What discount rate should you use? Your expected return from the investment is a good discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.

First Niagara Financial Group Intrinsic Value: DCF (FCF Based) Related Terms

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First Niagara Financial Group (First Niagara Financial Group) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » First Niagara Financial Group Inc (NAS:FNFG) » Definitions » Intrinsic Value: DCF (FCF Based)

Comparable Companies

Traded in Other Exchanges

N/A

Address

Website

https://www.firstniagara.com

First Niagara Financial Group Inc was organized in April, 1998 in Delaware. It provides a range of retail and commercial banking as well as other financial services through its wholly-owned, federally chartered savings bank subsidiary, First Niagara Bank. The Company has identified two business segments, banking and financial services. The Company's financial services activities consist of insurance and employee benefits consulting services. All of its other activities are considered banking. It provides its retail consumer and business customers with banking services including residential and commercial real estate loans, commercial business loans and leases, consumer loans, wealth management products, as well as retail and commercial deposit products. Additionally, it offers insurance and employee benefits consulting services through a wholly-owned subsidiary of the bank. The Company's subsidiaries provide financial services to individuals and small and medium size companies in its market areas. Its activity has been the origination of commercial real estate and business loans, leases, and residential mortgages to customers located within its market areas. Consistent with its long-term customer relationship development, it generally retains the servicing rights on residential mortgage loans that it sells which results in monthly service fee income to it. The Company also originates and retains in its various types of home equity and consumer loan products. It originates commercial real estate loans secured predominantly by first liens on apartment houses, office buildings, shopping centers, and industrial and warehouse properties. Commercial business loans includes business term loans, letters of credit, and lines-of-credit issued to small and medium size companies in its market areas, some of which are secured in part by additional owner occupied real estate. The Company's bi-weekly mortgages feature an accelerated repayment schedule and are linked to a deposit account to facilitate payments. It offers fixed-rate, fixed-term, monthly and bi-weekly home equity loans, and prime-based home equity lines of credit in its market areas. It offers a variety of fixed-rate installment and variable rate lines-of-credit consumer loans, including indirect mobile home loans as well as personal secured and unsecured loans. The Company's specialized lending consists of commercial leases and insurance premium financing. It offers insurance products and consulting services to help both its retail and commercial customers achieve their financial goals. The Company is subject to extensive federal and state regulation and supervision. Banking regulations are intended to protect depositors' funds, federal deposit insurance funds and the financial system as a whole, not security holders.

Executives

Julie Signorille	officer: Managing Director Operations	102 DUFFY AVENUE, HICKSVILLE NY 11801
Gregory W Norwood	officer: SEVP, Chief Financial Officer	726 EXCHANGE STREET SUITE 618 BUFFALO NY 14210
Mark R Rendulic	officer: EVP, Retail Banking	726 EXCHANGE STREET SUITE 618 BUFFALO NY 14210
Peter B. Robinson	director	5505 BLUE LAGOON DRIVE, MIAMI FL 33126
George M Philip	director	10 CORPORATE WOODS DRIVE ALBANY NY 12211-2395
Roxanne J Coady	director
Carl A Florio	director	C/O HUDSON RIVER BANK & TRUST CO, PO BOX 76, HUDSON NY 12534
Nathaniel D Woodson	director	C/O UIL HOLDINGS CORP 157 CHURCH STREET NEW HAVEN CT 06506
G Thomas Bowers	director	1045 LOCHLAND ROAD GENEVA NY 14456
Inder Koul	officer: Chief Information Officer	726 EXCHANGE STREET, SUITE 618 BUFFALO NY 14210
Joseph Saffire	officer: Managing Director, Head of Com	6467 MAIN STREET, WILLIAMSVILLE NY 14221
Liam Brickley	officer: SVP, Chief Credit Officer	726 EXHCHANGE STREET SUITE 618 BUFFALO NY 14210
Brian M Dempsey	officer: Principal Accounting Officer	726 EXCHANGE STREET BUFFALO NY 14210
Susan Harnett	director	726 EXCHANGE STREET SUITE 618 BUFFALO NY 14210
Kate White	officer: EVP, Managing Dir HR	726 EXCHANGE STREET BUFFALO NY 14210