Humana Inc. (HUM) Intrinsic Value & DCF Valuation
Medical - Healthcare Plans · NYSE
Current Price
$379.22
Intrinsic Value
$472.48
+19.7% margin of safety
What Is Humana Inc.'s Intrinsic Value?
As of 2026-06-12, our base-case DCF model estimates the intrinsic value of Humana Inc. (HUM) at $472.48 per share, compared with a market price of $379.22, a margin of safety of +19.7%. The base case assumes 15.8% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $397.36 to $557.31. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How our DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Humana Inc. (HUM) Undervalued?
At $379.22, HUM trades about 19.7% below our base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety we require before calling a stock undervalued.
COMPETITIVE MOAT
↑Government Program Dominance
Humana's strong focus on Medicare Advantage and Medicaid programs creates a significant barrier to entry. These government contracts are difficult for new players to replicate due to regulatory hurdles and established relationships.
↑Scale and Network Effects
As a large health insurer, Humana benefits from economies of scale in negotiating with providers. Its extensive network of doctors and hospitals offers greater value to members, making it harder for smaller competitors to attract and retain customers.
↑Brand Loyalty and Trust
Humana has built a reputation over decades, fostering trust among its large member base. This established brand recognition and member loyalty are difficult for rivals to overcome, especially in the sensitive healthcare sector.
INVESTMENT RISKS
↓Regulatory Scrutiny and Policy Changes
Changes in government healthcare policies, such as Medicare Advantage reimbursement rates, can significantly impact Humana's profitability. Ongoing investigations into insider fiduciary duties also raise concerns about governance and potential future penalties.
↓Rising Medical Costs
While recent analyst notes suggest softer medical cost trends, unexpected increases in healthcare utilization or drug prices can erode profit margins. This remains a persistent challenge for all health insurers.
↓Competition and Market Saturation
The health insurance market is highly competitive, with large players like UnitedHealth and Cigna. Humana faces pressure to innovate and maintain market share amidst evolving consumer demands and technological advancements.
Base case
HUM base case valuation
Intrinsic Value
$472.48
Margin of safety
+19.7%
Expected annual return
+4.5%
Base case assumptions: 15.8% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
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)
$1140.18
FCF/Share (TTM)
$10.57
ROIC (TTM)
3.2%
ROE (TTM)
6.2%
P/FCF
35.8x
EV/EBITDA
19.1x
FCF Yield
2.79%
Debt/Equity
0.75x
Based on trailing twelve-month data, HUM shows a free cash flow per share of $10.57 and a ROIC of 3.2%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 35.8x and FCF yield of 2.79% are important context metrics when evaluating HUM's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of HUM?
Humana Inc. currently generates $10.57 in free cash flow per share. At the current price of $379.22, 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 trades at a P/FCF ratio of 35.8x with a free cash flow yield of 2.79%. This P/FCF is in a moderate range. However, whether HUM is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
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 ($10.57) 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 0.75x, 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 3.2% suggests the company may face challenges generating returns above 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 0.75x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 19.1x, 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 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.