The estimated intrinsic value of CNO Financial Group, Inc. (CNO) using a Book Value × Return on Equity (P/B × ROE) model is $93.97 (based on the recommended P/B × ROE method), compared to the current stock price of $42.86. This suggests the stock may be undervalued by 119.2% relative to its intrinsic value.

For banks and financial institutions, traditional DCF models are unreliable because cash flows are heavily influenced by lending and deposit activities. Instead, SharesGrow uses a Book Value × ROE model: Intrinsic Value = Book Value Per Share × (Return on Equity ÷ Cost of Equity) × Growth Adjustment. This approach values the firm based on how efficiently it generates returns on shareholders' equity relative to its cost of capital — the standard methodology used by institutional investors for bank valuation.

The valuation uses a CAPM-derived discount rate of 5.21% (CAPM-derived from beta of 0.84). For comparison, the standard 20-year DCF model produces: Operating Cash Flow (OCF): $633.79 | Free Cash Flow (FCF): $633.79 | Net Income (NI): $396.44.

• Stock-Based Compensation (SBC) inflates Operating Cash Flow. This company's OCF is more than double its Net Income, while Free Cash Flow is close to OCF (low CapEx). The large OCF-to-NI gap is primarily from Stock-Based Compensation being added back to OCF. SBC is a real cost — it dilutes shareholders by issuing new shares. Our DCF model uses Net Income as the base instead of OCF, which accounts for the true dilution cost. If you see the OCF method showing a much higher IV, this is why — it overstates value by ignoring SBC dilution.
• High debt relative to cash flow. Our Discounted Cash Flow (DCF) model deducts net debt from the present value of future cash flows, which significantly reduces equity value per share. Analyst price targets typically do not subtract debt in the same way.