What is SGFY's Intrinsic value?

Signify Health Inc (SGFY) Intrinsic Value Analysis

Executive Summary

As of September 26, 2025, Signify Health Inc's estimated intrinsic value ranges from $9.83 to $9.83 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $9.83 -67.8%

Is Signify Health Inc (SGFY) undervalued or overvalued?

With the current market price at $30.49, the stock appears to be significantly overvalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Signify Health Inc's intrinsic value, including:

  1. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

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 0.5 0.57
Cost of equity 6.2% 8.0%
Cost of debt 6.3% 7.0%
Tax rate 3.0% 5.4%
Debt/Equity ratio 0.05 0.05
After-tax WACC 6.2% 8.0%

Valuation Methods

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $153M
Discount Rate (WACC) 8.0% - 6.2%
Enterprise Value $1,917M - $2,476M
Net Debt $(130)M
Equity Value $2,046M - $2,605M
Outstanding Shares 237M
Fair Value $9 - $11
Selected Fair Value $9.83

Key Financial Metrics

Metric Value
Market Capitalization $7215M
Enterprise Value $7085M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 14.60
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.05

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Earnings Power Value 100% $0.98
Weighted Average 100% $9.83

Investment Conclusion

Based on our comprehensive valuation analysis, Signify Health Inc's intrinsic value is $9.83, which is approximately 67.8% below the current market price of $30.49.

Key investment considerations:

  • Strong projected earnings growth (-16% to -2% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.05)

Given these factors, we believe Signify Health Inc is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.