Medical - Healthcare Plans · NYSE
Current Price
$243.12
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on Humana Inc. with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
Humana Inc., together with its subsidiaries, operates as a health and well-being company in the United States. It operates through three segments: Retail, Group and Specialty, and Healthcare Services. The company offers medical and supplemental benefit plans to individuals. It also has a contract with Centers for Medicare and Medicaid Services to administer the Limited Income Newly Eligible Transition prescription drug plan program; and contracts with various states to provide Medicaid, dual eligible, and long-term support services benefits. In addition, the company provides commercial fully insured medical and specialty health insurance benefits comprising dental, vision, and other supplemental health benefits; and administrative services only products to individuals and employer groups, as well as military services, such as TRICARE T2017 East Region contract. Further, it offers pharmacy solutions, provider services, and home solutions services, such as home health and other services to its health plan members, as well as to third parties. As of December 31, 2021, the company had approximately 17 million members in medical benefit plans, as well as approximately 5 million members in specialty products. Humana Inc. was founded in 1961 and is headquartered in Louisville, Kentucky.
ROIC (TTM)
3.6%
ROE (TTM)
6.2%
FCF Yield
4.36%
Based on trailing twelve-month data, HUM shows a free cash flow per share of N/A and a ROIC of 3.6%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of 4.36% are important context metrics when evaluating HUM's stock valuation relative to peers.
The intrinsic value of HUM 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 HUM is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $243.12. 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 Humana Inc.: (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 HUM'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 Humana Inc., 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. HUM's ROIC of 3.6% 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 HUM, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
