Huntington Bancshares IncorporatedHBANNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $16.93 per share(market-calibrated)

-0.2%

Upside to Fair Value

Current

$16.97

Pure Model

$16.87

Fair Value

$16.93

Bull Case

$19.53

Bear Case

$14.04

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

2.91%

Calibrated Growth

2.56%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $16.87.

What's Driving This Ratingfor HBAN

↓

CapEx normalizing toward maintenance

Historical CapEx is 1.62% of revenue (heavy investment phase). Model fades this to 1.50% by Year 10, freeing up ~$18M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 24.93% — below the sector mature average of 28.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $4.2B (27.36% margin).

→

Moderate revenue growth

Analyst consensus projects -8.62% revenue growth, fading to 2.50% by Year 10. Revenue reaches $15.3B (vs $12.5B today).

✓

Model and market roughly agree

Market-implied terminal growth of 2.91% is close to the model's 2.50% (only 41bps apart). The DCF assumptions are well-aligned with how the market is pricing this stock.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 80.11% indicates efficient cash generation. FCF reaches $4.0B by Year 10 (25.84% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.96

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)8.82%

Cost of Debt

Pre-tax Cost of Debt14.24%

Tax Rate17.08%

After-tax Cost of Debt11.81%

Equity Weight (E/V)57.59%

Debt Weight (D/V)42.41%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (57.59% × 8.82%) + (42.41% × 11.81%)

= 10.08%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$11.4B	$12.8B	$13.5B	$14.2B	$15.3B
EBIT	$2.8B	$3.2B	$3.5B	$3.8B	$4.2B
Tax	$486M	$546M	$601M	$649M	$715M
NOPAT	$2.4B	$2.7B	$2.9B	$3.1B	$3.5B
+ Depreciation	$559M	$628M	$662M	$696M	$749M
- Capex	$185M	$204M	$212M	$219M	$229M
- Δ NWC	-$108M	$38M	$33M	$35M	$37M
Free Cash Flow	$2.8B	$3.0B	$3.3B	$3.6B	$4.0B
Discount Factor	0.908	0.750	0.619	0.510	0.383
Present Value	$2.6B	$2.3B	$2.1B	$1.8B	$1.5B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$4.0B

Terminal Growth Rate2.50%

WACC10.08%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$53.4B

PV of Terminal Value$20.4B

Exit Multiple Method

Year 10 EBITDA$4.9B

Exit Multiple (EV/EBITDA)12.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$59.2B

PV of Terminal Value$22.7B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$20.1B

PV of Terminal Value$20.4B

Enterprise Value$40.5B

(-) Net Debt$16.7B

Equity Value$23.8B

Shares Outstanding1.5B

Price per Share$16.12

Exit Multiple Method

PV of Projected FCFs$20.1B

PV of Terminal Value$22.7B

Enterprise Value$42.8B

(-) Net Debt$16.7B

Equity Value$26.1B

Shares Outstanding1.5B

Price per Share$17.62

Pure Model Fair Value

$16.87

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
8.08%	$22.30	$23.13	$24.11	$25.28	$26.70
9.08%	$18.83	$19.40	$20.06	$20.82	$21.72
10.08%	$16.01	$16.41	$16.87	$17.39	$18.00
11.08%	$13.64	$13.94	$14.28	$14.65	$15.07
12.08%	$11.63	$11.86	$12.10	$12.38	$12.69

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$14.04

-17.2% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.20

Base Case

$16.87

-0.6% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.96

Bull Case

$19.53

15.1% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.82

Key Assumptions & Drivers• Financial Services Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-8.62%

Year 3 Revenue Growth3.05%

Year 5 Revenue Growth2.50%

Year 7 Revenue Growth2.50%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin24.93%

Terminal EBIT Margin28.00%

Tax Rate17.08%

Historical Capex / Rev1.62%

Terminal Capex / Rev1.50%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 12x EV/EBITDA (Financial Services sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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