On 12 Nov 2026 our base value for Erie Indemnity is $187.71 a share, 30.5% below its $270.00 close; 0 of 1 valuation methods put it above the price.
| Method | Value | vs price | Basis |
|---|---|---|---|
| Discounted cash flow | $187.71 | -30.5% | free cash flow $554.04m, growth 0.3% for 5 years, then fading to 3% over 5 more, discounted at 8.1%; plus net cash $6.89 a share; stress floor $136.89 |
| Exit multiple (P/E) | — | — | no exit multiple: the five-year median of 31.7x is 1.5x the 21.0x this name trades at today (limit 1.5x) — the market has re-rated the name, so its own history prices a business it is no longer paid for. The forward PE is not a substitute: it is today's price divided by earnings, and an anchor built from it can only restate the price |
| Sum of the parts | — | — | no sum of the parts: this run holds no segment disclosure for the name |
| Price to sales | — | — | not reached: the cash-flow or earnings methods produced an anchor, so this fallback was not run |
| Tangible book | — | — | used only for lenders, where book value is the business |
| Price to FFO (REITs) | — | — | used only for REITs |
Each working is rebuilt by code from the valuation's own figures and checked against the published value.
The discount rate:
| Risk-free rate | 5.13% (10-year US Treasury yield) |
| Company's own beta | 0.24 (5 years of monthly returns against the S&P 500; standard error 0.27) |
| Peer beta | 0.52 (median of 5 S&P 500 Insurance Brokers companies) |
| Blend of own and peers | 0.49 (12% own, 88% peers, weighted by how precisely the company's own beta is measured) |
| Adjusted beta | 0.66 (0.67 × 0.49 + 0.33, pulled toward the market's 1.0) |
| Equity risk premium | 4.5% |
| Discount rate = risk-free + adjusted beta × premium | 8.10% |
Free cash flow grows 0.30% a year for 5 years, then fades in equal steps toward 3% over 5 more; each year is discounted by 1 ÷ (1 + rate)^year:
| Year | Growth | Free cash flow | Discount factor | Present value |
|---|---|---|---|---|
| Now | — | $554.04m | — | — |
| Year 1 | 0.30% | $555.70m | 0.9251 | $514.06m |
| Year 2 | 0.30% | $557.37m | 0.8558 | $476.97m |
| Year 3 | 0.30% | $559.04m | 0.7916 | $442.56m |
| Year 4 | 0.30% | $560.72m | 0.7323 | $410.62m |
| Year 5 | 0.30% | $562.40m | 0.6774 | $380.99m |
| Year 6 | 0.75% | $566.62m | 0.6267 | $355.09m |
| Year 7 | 1.20% | $573.42m | 0.5797 | $332.42m |
| Year 8 | 1.65% | $582.88m | 0.5363 | $312.59m |
| Year 9 | 2.10% | $595.12m | 0.4961 | $295.24m |
| Year 10 | 2.55% | $610.30m | 0.4589 | $280.08m |
| Terminal value = year-10 cash flow × (1 + 3%) ÷ (8.10% − 3%) | $12.33bn |
| Terminal value in today's money | $5.66bn |
| Present value of years 1–10 | $3.80bn |
| Total present value | $9.46bn |
| Shares outstanding | 52.30m |
| Cash flows per share = total ÷ shares | $180.82 |
| Plus net cash per share | $6.89 |
| Value per share | $187.71 |
How the DCF value moves with the discount rate and the starting growth (the middle cell is the published value):
| Discount rate | Growth -4.7% | Growth 0.3% | Growth 5.3% |
|---|---|---|---|
| 7.10% | $168.54 | $230.63 | — |
| 8.10% | $138.99 | $187.71 | $253.55 |
| 9.10% | $119.04 | $158.82 | $212.31 |
The same DCF at each beta, starting growth unchanged:
| Beta | Value | Discount rate | DCF value |
|---|---|---|---|
| Company's own beta | 0.24 | 6.21% | $291.25 |
| Peer beta | 0.52 | 7.47% | $212.52 |
| Adjusted beta (used) | 0.66 | 8.10% | $187.71 |
The base value is the average of the methods kept in it:
| Method | Value |
|---|---|
| Discounted cash flow | $187.71 |
One method is kept, so the base value is its value: $187.71
Base value $187.71 a share
One-year price simulation: a 10% chance the price is below $172.47 and a 10% chance it is above $434.43 in a year; a 52% chance it is higher than today's $270.00, from 35.86% volatility. The simulation assumes the price drifts up at our discount rate of 8.1% a year.
At $270.00 the price implies free cash flow growing 6.3% a year for five years and then fading toward 3% over five more; its revenue has grown 0.3%.
| Week | Price | Base value |
|---|---|---|
| 2 Oct 2026 | $221.09 | $219.47 |
| 9 Oct 2026 | $222.04 | $217.08 |
| 16 Oct 2026 | $243.71 | $209.15 |
| 23 Oct 2026 | $253.52 | $212.44 |
| 30 Oct 2026 | $261.39 | $216.42 |
| 6 Nov 2026 | $273.07 | — |
| 12 Nov 2026 | $270.00 | $187.71 |
Data as of 12 Nov 2026; financials to 30 Sep 2026. Sources: company filings via EODHD, SEC EDGAR, US Treasury. How these values are computed. Not investment advice.
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