Markel’s primary business is property and casualty insurance, and the company focuses primarily on specialty lines, ranging from areas such as executive liability to commercial equine insurance. Markel uses capital generated by its insurance operations to buy noninsurance operations in diverse areas, such as bakery equipment manufacturing and residential homebuilding. I review Markel’s business, look at its key ratios, and derive the intrinsic value using Discounted Cash Flow (DCF) analysis. Since this is a long video, please feel free to use the time stamps in the video if you only wish to watch certain topics.
I review various key ratios such as Revenue, Net Income, Shares outstanding, Dividends, Payout Ratio, Free Cash Flows (FCF), Financial Leverage, Current Ratio, Debt to Equity Ratio, Return on Equity (ROE), Days Sales Outstanding (DSO), Days Inventory, Payable Period, Cash Conversion Cycle, Inventory Turnover, etc.
After taking into account Markel’s 2021 free cash flow of $2,129 million figure, a 4% growth rate of FCF (growth for the next 10 years), 10% discount rate, 3.23% long term growth rate (growth from 10 year mark in the future to perpetuity), 14 million shares outstanding, and $4,361 million of long term debt, the DCF analysis yields us an intrinsic value of $2071.26 per share.
Timestamp
0:00 Introduction
0:32 Business Overview
8:39 Key Ratios Analysis
10:44 Discounted Cash Flow Analysis / Intrinsic Value
13:19 Conclusion
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References:
Markel’s Website: here.
Morningstar Key Ratios Link: here.
Useful Resources here.
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