As of May 25, 2025, CVS Health Corp's estimated intrinsic value ranges from $45.58 to $421.88 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $128.21 | +110.8% |
| Discounted Cash Flow (5Y) | $107.39 | +76.5% |
| Dividend Discount Model (Multi-Stage) | $49.92 | -17.9% |
| Dividend Discount Model (Stable) | $45.58 | -25.1% |
| Earnings Power Value | $421.88 | +593.5% |
Is CVS Health Corp (CVS) undervalued or overvalued?
With the current market price at $60.83, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate CVS Health Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.68 | 0.99 |
| Cost of equity | 7.0% | 10.4% |
| Cost of debt | 4.0% | 7.0% |
| Tax rate | 25.3% | 25.6% |
| Debt/Equity ratio | 0.86 | 0.86 |
| After-tax WACC | 5.1% | 8.0% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $107 | $190,203M | 77.1% |
| 10-Year Growth | $128 | $216,486M | 59.8% |
| 5-Year EBITDA | $84 | $160,625M | 72.9% |
| 10-Year EBITDA | $114 | $198,485M | 56.2% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $36,688M |
| Discount Rate (WACC) | 8.0% - 5.1% |
| Enterprise Value | $459,205M - $715,203M |
| Net Debt | $54,634M |
| Equity Value | $404,571M - $660,569M |
| Outstanding Shares | 1,262M |
| Fair Value | $320 - $523 |
| Selected Fair Value | $421.88 |
| Metric | Value |
|---|---|
| Market Capitalization | $76791M |
| Enterprise Value | $131425M |
| Trailing P/E | 14.54 |
| Forward P/E | 15.66 |
| Trailing EV/EBITDA | 9.90 |
| Current Dividend Yield | 439.25% |
| Dividend Growth Rate (5Y) | 6.48% |
| Debt-to-Equity Ratio | 0.86 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $38.46 |
| Discounted Cash Flow (5Y) | 25% | $26.85 |
| Dividend Discount Model (Multi-Stage) | 20% | $9.98 |
| Dividend Discount Model (Stable) | 15% | $6.84 |
| Earnings Power Value | 10% | $42.19 |
| Weighted Average | 100% | $124.32 |
Based on our comprehensive valuation analysis, CVS Health Corp's weighted average intrinsic value is $124.32, which is approximately 104.4% above the current market price of $60.83.
Key investment considerations:
Given these factors, we believe CVS Health Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.