CVS Health Corp. (CVS) Intrinsic Value & DCF Valuation
Medical - Healthcare Plans · NYSE
Current Price
$87.95
Intrinsic Value
$106.16
+17.2% margin of safety
What Is CVS Health Corp.'s Intrinsic Value?
As of 2026-10-07, the base-case DCF model estimates the intrinsic value of CVS Health Corp. (CVS) at $106.16 per share, compared with a market price of $87.95, a margin of safety of +17.2%. The base case assumes 4.1% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $78.75 to $138.21. 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 the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is CVS Health Corp. (CVS) Undervalued?
At $87.95, CVS trades about 17.2% below the base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety required before calling a stock undervalued.
COMPETITIVE MOAT
↑Integrated Healthcare Ecosystem
CVS Health's unique integration of pharmacy, insurance (Aetna), and retail creates a powerful ecosystem. This allows for cross-selling opportunities and data synergy across its diverse business segments.
↑Pharmacy Network Scale
The vast network of CVS pharmacies provides significant scale and convenience for customers. This extensive reach creates high switching costs for consumers seeking their prescriptions.
↑Aetna's Market Position
Acquiring Aetna solidified CVS's position in the health insurance market. This provides a substantial customer base and deep insights into healthcare utilization and costs.
INVESTMENT RISKS
↓Litigation and Fiduciary Duty Concerns
Recent reports suggest potential insider fiduciary duty breaches. Such allegations, if substantiated, could lead to significant legal liabilities and reputational damage.
↓Healthcare Cost Inflation
Rising healthcare costs can pressure margins for both insurers and PBMs. This could impact profitability if CVS cannot effectively manage or pass on these increased expenses.
↓Evolving Healthcare Landscape
The healthcare industry is constantly changing with new technologies and care models. CVS must adapt to these shifts to maintain its competitive edge and relevance.
Base case
CVS base case valuation
Intrinsic Value
$106.16
Margin of safety
+17.2%
Expected annual return
+3.8%
Base case assumptions: 4.1% annual growth, 10.0% discount rate, 9.54x exit multiple, 5 year projection. Data as of 2026-10-07.
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 CVS valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for CVS Health Corp. respond.
Open DCF Calculator for CVSCompany Overview
CVS Health Corp. is a health solutions company, which engages in the provision of healthcare services. It operates through the following segments: Health Care Benefits, Health Services, Pharmacy and Consumer Wellness, and Corporate and Other. The Health Care Benefits segment operates as a health care benefits provider. The Health Services segment offers a full range of PBM solutions, delivers health care services in its medical clinics, virtually, and in the home. The Pharmacy & Consumer Wellness segment dispenses prescriptions in its retail pharmacies and through its infusion operations. The Corporate and Other Segment is involved in management and administrative expenses. The company was founded by Stanley P. Goldstein and Ralph Hoagland in 1963 and is headquartered in Woonsocket, RI.
Financial Metrics — CVS Stock Valuation Data
Revenue/Share (TTM)
$325.30
FCF/Share (TTM)
$9.21
ROIC (TTM)
4.1%
ROE (TTM)
6.4%
P/FCF
9.5x
EV/EBITDA
13.2x
FCF Yield
10.48%
Debt/Equity
0.96x
Based on trailing twelve-month data, CVS shows a free cash flow per share of $9.21 and a ROIC of 4.1%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 9.5x and FCF yield of 10.48% are important context metrics when evaluating CVS's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of CVS?
CVS Health Corp. currently generates $9.21 in free cash flow per share. At the current price of $87.95, 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 CVS undervalued?
CVS trades at a P/FCF ratio of 9.5x with a free cash flow yield of 10.48%. A low P/FCF means investors are paying less per dollar of free cash flow; whether that is cheap depends on the company's growth, cyclicality, and capital intensity. However, whether CVS 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 CVS stock using DCF?
To perform a DCF valuation on CVS Health Corp.: (1) Start with the trailing free cash flow per share ($9.21) 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 — with a debt-to-equity of 0.96x, 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 CVS?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For CVS Health Corp., 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. CVS's ROIC of 4.1% means the company's return on invested capital sits below the level that typically clears its cost of capital.
How does WACC affect CVS stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For CVS, with a debt-to-equity ratio of 0.96x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 13.2x, 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 CVS 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 CVS with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-10-07. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.