Medical - Healthcare Plans · NYSE
Current Price
$83.90
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on CVS Health Corporation with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
CVS Health Corporation provides health services in the United States. The company's Health Care Benefits segment offers traditional, voluntary, and consumer-directed health insurance products and related services. It serves employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers, governmental units, government-sponsored plans, labor groups, and expatriates. Its Pharmacy Services segment offers pharmacy benefit management solutions, including plan design and administration, formulary management, retail pharmacy network management, mail order pharmacy, specialty pharmacy and infusion, clinical, and disease and medical spend management services. It serves employers, insurance companies, unions, government employee groups, health plans, prescription drug plans, Medicaid managed care plans, plans offered on public health insurance and private health insurance exchanges, other sponsors of health benefit plans, and individuals. This segment operates retail specialty pharmacy stores; and specialty mail-order, mail-order dispensing, and compounding pharmacies, as well as branches for infusion and enteral nutrition services. The company's Retail/LTC segment sells prescription and over-the-counter drugs, consumer health and beauty products, and personal care products; and provides health care services through its MinuteClinic walk-in medical clinics. This segment also distributes prescription drugs; and provides related pharmacy consulting and other ancillary services to care facilities and other care settings. As of December 31, 2021, it operated approximately 9,900 retail locations and 1,200 MinuteClinic locations, as well as online retail pharmacy websites, LTC pharmacies, and onsite pharmacies. The company was formerly known as CVS Caremark Corporation and changed its name to CVS Health Corporation in September 2014. CVS Health Corporation was founded in 1963 and is headquartered in Woonsocket, Rhode Island.
ROIC (TTM)
2.1%
ROE (TTM)
2.3%
FCF Yield
7.26%
Based on trailing twelve-month data, CVS shows a free cash flow per share of N/A and a ROIC of 2.1%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of 7.26% are important context metrics when evaluating CVS's stock valuation relative to peers.
The intrinsic value of CVS depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether CVS is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $83.90. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on CVS Health Corporation: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Medical - Healthcare Plans industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting CVS's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For CVS Health Corporation, this means projecting how much free cash flow the Medical - Healthcare Plans will produce over the next 5-10 years, then discounting those amounts to today's dollars. CVS's ROIC of 2.1% suggests the company may face challenges generating returns above its cost of capital.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For CVS, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
