As of May 23, 2025, Inovalon Holdings Inc's estimated intrinsic value ranges from $4.14 to $14.21 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $14.21 | -55.0% |
| Discounted Cash Flow (5Y) | $9.05 | -71.3% |
| Dividend Discount Model (Multi-Stage) | $4.66 | -85.2% |
| Dividend Discount Model (Stable) | $11.89 | -62.3% |
| Earnings Power Value | $4.14 | -86.9% |
Is Inovalon Holdings Inc (INOV) undervalued or overvalued?
With the current market price at $31.55, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Inovalon Holdings Inc'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 | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.64 | 0.79 |
| Cost of equity | 5.9% | 8.3% |
| Cost of debt | 8.0% | 8.0% |
| Tax rate | 31.5% | 35.6% |
| Debt/Equity ratio | 0.14 | 0.14 |
| After-tax WACC | 5.8% | 7.9% |
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 | $15 | $3,101M | 89.7% |
| 10-Year Growth | $23 | $4,412M | 80.7% |
| 5-Year EBITDA | $4 | $1,806M | 82.3% |
| 10-Year EBITDA | $7 | $2,563M | 66.9% |
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 | $124M |
| Discount Rate (WACC) | 7.9% - 5.8% |
| Enterprise Value | $1,570M - $2,137M |
| Net Debt | $801M |
| Equity Value | $769M - $1,336M |
| Outstanding Shares | 155M |
| Fair Value | $5 - $9 |
| Selected Fair Value | $4.14 |
| Metric | Value |
|---|---|
| Market Capitalization | $8018M |
| Enterprise Value | $8819M |
| Trailing P/E | 154.44 |
| Forward P/E | 421.27 |
| Trailing EV/EBITDA | 7.35 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 0.14 |
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% | $4.26 |
| Discounted Cash Flow (5Y) | 25% | $2.26 |
| Dividend Discount Model (Multi-Stage) | 20% | $0.93 |
| Dividend Discount Model (Stable) | 15% | $1.78 |
| Earnings Power Value | 10% | $0.41 |
| Weighted Average | 100% | $9.65 |
Based on our comprehensive valuation analysis, Inovalon Holdings Inc's weighted average intrinsic value is $9.65, which is approximately 69.4% below the current market price of $31.55.
Key investment considerations:
Given these factors, we believe Inovalon Holdings Inc is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.