Humana Inc. (HUM) Intrinsic Value & DCF Valuation
Medical - Healthcare Plans · NYSE
Current Price
$375.17
Intrinsic Value
Use the calculator below to estimate
COMPETITIVE MOAT
↑Scale and Network Effects
Humana's large member base creates significant scale advantages in negotiating with providers. This scale also fosters network effects, making it more attractive for both members and providers to join its platform.
↑Integrated Care Model (CenterWell)
CenterWell's expansion into primary care and home health creates a sticky ecosystem. This integration offers members a more seamless experience, increasing switching costs and driving value beyond traditional insurance.
↑Government Contract Expertise
Humana's deep experience in managing government-sponsored health plans (Medicare Advantage, Medicaid) provides a strong competitive edge. Navigating these complex regulatory environments requires specialized knowledge and infrastructure.
INVESTMENT RISKS
↓Potential Acquisition by Ambea
The recommended offer from Swedish care provider Ambea introduces uncertainty regarding Humana's future ownership and strategic direction. This could lead to significant operational changes.
↓Insider Fiduciary Duty Allegations
Allegations of insider fiduciary duty breaches raise concerns about corporate governance and potential legal ramifications. This could impact investor confidence and shareholder value.
↓Execution Risk of CenterWell Expansion
While CenterWell is a growth driver, its rapid expansion and integration of acquisitions carry execution risks. Failure to effectively manage this growth could hinder Humana's diversification strategy.
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
17.1x
FCF Yield
-0.98%
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 $375.17, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is HUM undervalued?
HUM currently has negative free cash flow, so its P/FCF ratio is not meaningful and cannot tell you whether the stock is cheap or expensive. With cash flow negative, a DCF-based undervalued or overvalued judgment is unreliable — look at the path back to positive cash generation instead.
How do I value HUM stock using DCF?
To perform a DCF valuation on Humana Inc.: (1) Start with the trailing free cash flow per share ($-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 17.1x, 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 2026-07-30. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.