Humana Inc. (HUM) Intrinsic Value & DCF Valuation
Medical - Healthcare Plans · NYSE
Current Price
$409.85
Intrinsic Value
Use the calculator below to estimate
COMPETITIVE MOAT
↑Government Program Expertise
Humana's deep experience navigating complex government healthcare programs like Medicare Advantage provides a significant barrier to entry for new competitors. This expertise translates into operational efficiency and regulatory compliance.
↑Scale and Network Effects
As a large health insurer, Humana benefits from significant scale in negotiating provider rates and managing risk. Its extensive member base also creates network effects, making it more attractive to providers and members alike.
↑Member Loyalty and Switching Costs
While not insurmountable, members in government programs often face inertia and complexity in switching plans. Humana's established presence and brand recognition contribute to member retention and create implicit switching costs.
INVESTMENT RISKS
↓Discontinuation of Government Plans
Humana's decision to drop certain Medicare Advantage plans signals potential future strategic shifts and member attrition. This could lead to a loss of revenue and market share in specific regions.
↓Healthcare Cost Inflation
Rising healthcare costs can outpace premium increases, squeezing insurer margins. Humana's profitability is sensitive to the overall trend of medical cost inflation.
↓Operational Execution and Integration
The HealthStream deal highlights Humana's efforts to improve caregiver retention. However, the success of such initiatives and the integration of new strategies are critical for operational efficiency and member satisfaction.
Customize the HUM valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Humana Inc. respond.
Open DCF Calculator for HUMCompany Overview
Humana Inc., a prominent health and well-being enterprise, operates across the United States through its various subsidiary companies. Its operational structure is divided into three main segments: Retail, Group and Specialty, and Healthcare Services. The firm provides a wide array of medical and supplementary insurance plans directly to individual consumers. Furthermore, Humana collaborates with government entities; it holds a contract with the Centers for Medicare and Medicaid Services (CMS) to manage the Limited Income Newly Eligible Transition (LI NET) prescription drug program. The company also secures agreements with numerous states to deliver Medicaid, dual-eligible, and long-term care support benefits. For employer groups and individuals, Humana furnishes fully insured commercial medical and specialized health coverage, which encompasses dental, vision, and other ancillary health benefits. They additionally offer administrative services only (ASO) solutions and extend support to military personnel through contracts like the TRICARE T2017 East Region. Beyond insurance products, the company delivers comprehensive healthcare services directly. These include pharmacy management, provider network services, and a suite of home-based solutions such as home health care, serving both its own health plan enrollees and external clients. By the close of 2021 (December 31), Humana's reach extended to approximately 17 million individuals enrolled in its medical benefit plans and an additional 5 million utilizing its specialized product offerings. Established in 1961, Humana Inc. maintains its corporate headquarters in Louisville, Kentucky.
Financial Metrics — HUM Stock Valuation Data
Revenue/Share (TTM)
$1211.98
FCF/Share (TTM)
$-3.69
ROIC (TTM)
4.5%
ROE (TTM)
6.9%
P/FCF
n/m
EV/EBITDA
18.4x
FCF Yield
-0.90%
Debt/Equity
0.74x
HUM currently has negative free cash flow, so cash-flow ratios such as P/FCF and FCF yield do not give a meaningful read on whether the stock is cheap or expensive. A DCF valuation is unreliable until cash generation turns positive — focus on the path to profitability instead.
Frequently Asked Questions
What is the intrinsic value of HUM?
Humana Inc. currently generates $-3.69 in free cash flow per share. At the current price of $409.85, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is HUM undervalued?
HUM currently has negative free cash flow, so its P/FCF ratio is not meaningful and cannot tell you whether the stock is cheap or expensive. With cash flow negative, a DCF-based undervalued or overvalued judgment is unreliable — look at the path back to positive cash generation instead.
How do I value HUM stock using DCF?
To perform a DCF valuation on Humana Inc.: (1) Start with the trailing free cash flow per share ($-3.69) 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 — with a debt-to-equity of 0.74x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to HUM?
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 company will produce over the next 5-10 years, shaped by Medical - Healthcare Plans trends, then discounting those amounts to today's dollars. HUM's ROIC of 4.5% means the company's return on invested capital sits below the level that typically clears its cost of capital.
How does WACC affect HUM stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For HUM, with a debt-to-equity ratio of 0.74x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 18.4x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See HUM PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Healthcare valuationsDCF and P/E value HUM with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-09-11. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.