As of June 20, 2025, Tenet Healthcare Corp's estimated intrinsic value ranges from $148.48 to $774.68 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $735.23 | +338.7% |
| Discounted Cash Flow (5Y) | $663.57 | +296.0% |
| Dividend Discount Model (Multi-Stage) | $361.91 | +116.0% |
| Dividend Discount Model (Stable) | $148.48 | -11.4% |
| Earnings Power Value | $774.68 | +362.3% |
Is Tenet Healthcare Corp (THC) undervalued or overvalued?
With the current market price at $167.58, 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 Tenet Healthcare 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 | 0.92 | 1.14 |
| Cost of equity | 8.1% | 11.2% |
| Cost of debt | 5.3% | 5.7% |
| Tax rate | 20.6% | 22.1% |
| Debt/Equity ratio | 0.86 | 0.86 |
| After-tax WACC | 6.3% | 8.1% |
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 | $664 | $71,810M | 73.3% |
| 10-Year Growth | $735 | $78,466M | 54.5% |
| 5-Year EBITDA | $505 | $57,089M | 66.4% |
| 10-Year EBITDA | $605 | $66,355M | 46.1% |
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 | $5,816M |
| Discount Rate (WACC) | 8.1% - 6.3% |
| Enterprise Value | $71,890M - $92,372M |
| Net Debt | $10,171M |
| Equity Value | $61,719M - $82,201M |
| Outstanding Shares | 93M |
| Fair Value | $664 - $885 |
| Selected Fair Value | $774.68 |
| Metric | Value |
|---|---|
| Market Capitalization | $15567M |
| Enterprise Value | $25738M |
| Trailing P/E | 10.70 |
| Forward P/E | 3.90 |
| Trailing EV/EBITDA | 7.55 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| 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% | $220.57 |
| Discounted Cash Flow (5Y) | 25% | $165.89 |
| Dividend Discount Model (Multi-Stage) | 20% | $72.38 |
| Dividend Discount Model (Stable) | 15% | $22.27 |
| Earnings Power Value | 10% | $77.47 |
| Weighted Average | 100% | $558.58 |
Based on our comprehensive valuation analysis, Tenet Healthcare Corp's weighted average intrinsic value is $558.58, which is approximately 233.3% above the current market price of $167.58.
Key investment considerations:
Given these factors, we believe Tenet Healthcare Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.