DCF Studio

    CAH · NYQ · Healthcare

    Cardinal Health, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 174.52

    Market price

    USD 254.33

    Implied upside

    -31.4%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-06-30

    AdjustedReported capital expenditure averages just 0.24% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.00% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.
    AdjustedCapital expenditure runs at 1.0% of revenue against depreciation of 0.3%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 174.52-31.4%
    Exit multiple
    USD 210.50-17.2%
    Market price
    USD 254.33

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn3bnFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 265.8bnUSD 281.9bnUSD 297.7bnUSD 313.0bnUSD 327.8bnUSD 341.8bnUSD 354.9bnUSD 366.9bnUSD 377.8bnUSD 387.2bn+4.3%
    EBITUSD 2.7bnUSD 2.9bnUSD 3.1bnUSD 3.2bnUSD 3.4bnUSD 3.5bnUSD 3.6bnUSD 3.8bnUSD 3.9bnUSD 4.0bn+4.3%
    NOPATUSD 2.2bnUSD 2.3bnUSD 2.4bnUSD 2.5bnUSD 2.7bnUSD 2.8bnUSD 2.9bnUSD 3.0bnUSD 3.1bnUSD 3.1bn+4.3%
    Add depreciation & amortisationUSD 917.9mUSD 973.5mUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.3bn+4.3%
    Less capital expenditureUSD -2.7bnUSD -2.6bnUSD -2.6bnUSD -2.5bnUSD -2.4bnUSD -2.2bnUSD -2.1bnUSD -1.9bnUSD -1.7bnUSD -1.5bn-6.4%
    Capex, % of revenue1.0%0.9%0.9%0.8%0.7%0.7%0.6%0.5%0.4%0.4%-
    Less increase in working capitalUSD 239.9mUSD 334.9mUSD 329.2mUSD 320.1mUSD 307.7mUSD 291.9mUSD 272.8mUSD 250.4mUSD 225.0mUSD 196.7m+2.2%
    Free cashflow to firmUSD 653.8mUSD 968.3mUSD 1.2bnUSD 1.5bnUSD 1.7bnUSD 2.0bnUSD 2.3bnUSD 2.6bnUSD 2.9bnUSD 3.2bn+19.3%
    Discount factor0.96540.89970.83860.78150.72840.67890.63270.58970.54960.5122-
    Present valueUSD 631.2mUSD 871.3mUSD 1.0bnUSD 1.1bnUSD 1.3bnUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.6bnUSD 1.6bn-
    Present Value Of The ForecastUSD 12.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.679Reported 0.521, pulled toward 1.0 (Blume)
    Cost of equity7.77%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 9.1x interest cover. Book interest / average debt was lower, at 4.0%.
    Market capitalisationUSD 58.9bn86.9% of capital
    Total debtUSD 8.9bn13.1% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.30%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 174.52

    73% of EV

    Forecast FCFF, final year
    USD 3.2bn
    Capex at depreciation, working capital in reinvestment
    USD 3.1bn
    Less reinvestment at g/ROIC (4.2% of NOPAT)
    USD -130.7m
    Capitalised
    USD 3.0bn
    ROIC (reported)
    60.0%
    Terminal value, undiscounted
    USD 64.3bn
    Terminal value, discounted
    USD 32.9bn
    Enterprise value
    USD 45.4bn
    Less net debt
    USD 4.0bn
    Equity value
    USD 41.4bn

    Exit at 15.2x EBITDA

    Value per shareUSD 210.50

    77% of EV

    Terminal value, undiscounted
    USD 80.9bn
    Terminal value, discounted
    USD 41.4bn
    Enterprise value
    USD 53.9bn
    Less net debt
    USD 4.0bn
    Equity value
    USD 49.9bn

    Spread between methods: 19%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.30%253.76284.56326.49386.80480.84
    6.30%192.14208.98230.32258.22296.19
    7.30%152.04162.19174.51189.76209.09
    8.30%123.94130.47138.16147.35158.51
    9.30%103.21107.60112.67118.58125.55

    Outlined: this model. Green text: above today's price of 254.33. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year7.4%4.3%7.9%
    EBIT margin1.2%1.0%1.4%
    Discount rate-7.3%6.0%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.