DCF Studio

    CVS · NYQ · Healthcare

    CVS Health Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 112.79

    Market price

    USD 88.51

    Implied upside

    +27.4%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedReported capital expenditure averages just 0.79% 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 1.23% 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.

    Value Per Share

    Perpetuity growth
    USD 112.79+27.4%
    Exit multiple
    USD 140.34+58.6%
    Market price
    USD 88.51

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn6bn11bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 417.9bnUSD 430.1bnUSD 442.4bnUSD 454.9bnUSD 467.5bnUSD 480.1bnUSD 492.9bnUSD 505.7bnUSD 518.6bnUSD 531.6bn+2.7%
    EBITUSD 15.0bnUSD 15.4bnUSD 15.8bnUSD 16.3bnUSD 16.7bnUSD 17.2bnUSD 17.6bnUSD 18.1bnUSD 18.6bnUSD 19.0bn+2.7%
    NOPATUSD 11.8bnUSD 12.2bnUSD 12.5bnUSD 12.9bnUSD 13.2bnUSD 13.6bnUSD 13.9bnUSD 14.3bnUSD 14.7bnUSD 15.0bn+2.7%
    Add depreciation & amortisationUSD 5.1bnUSD 5.3bnUSD 5.4bnUSD 5.6bnUSD 5.7bnUSD 5.9bnUSD 6.0bnUSD 6.2bnUSD 6.4bnUSD 6.5bn+2.7%
    Less capital expenditureUSD -5.1bnUSD -5.8bnUSD -6.4bnUSD -7.1bnUSD -7.8bnUSD -8.5bnUSD -9.3bnUSD -10.1bnUSD -10.9bnUSD -11.8bn+9.7%
    Capex, % of revenue1.2%1.3%1.4%1.6%1.7%1.8%1.9%2.0%2.1%2.2%-
    Less increase in working capitalUSD -746.6mUSD -576.7mUSD -582.9mUSD -588.6mUSD -593.8mUSD -598.6mUSD -602.9mUSD -606.6mUSD -609.8mUSD -612.5m-2.2%
    Free cashflow to firmUSD 11.1bnUSD 11.1bnUSD 10.9bnUSD 10.8bnUSD 10.6bnUSD 10.3bnUSD 10.1bnUSD 9.8bnUSD 9.5bnUSD 9.1bn-2.1%
    Discount factor0.96880.90930.85350.80110.75190.70580.66240.62180.58360.5478-
    Present valueUSD 10.7bnUSD 10.1bnUSD 9.3bnUSD 8.6bnUSD 7.9bnUSD 7.3bnUSD 6.7bnUSD 6.1bnUSD 5.5bnUSD 5.0bn-
    Present Value Of The ForecastUSD 77.3bn

    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
    Beta0.719Reported 0.580, pulled toward 1.0 (Blume)
    Cost of equity7.93%Risk-free + beta x equity risk premium
    Cost of debt5.78%Risk-free + 89bp, the spread for a A- rating at 3.3x interest cover. Book interest / average debt was lower, at 3.8%.
    Market capitalisationUSD 113.2bn58.6% of capital
    Total debtUSD 80.0bn41.4% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC6.54%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 112.79

    64% of EV

    Forecast FCFF, final year
    USD 9.1bn
    Capex at depreciation, working capital in reinvestment
    USD 15.0bn
    Less reinvestment at g/ROIC (35.2% of NOPAT)
    USD -5.3bn
    Capitalised
    USD 9.7bn
    ROIC (reported)
    7.1%
    Terminal value, undiscounted
    USD 247.2bn
    Terminal value, discounted
    USD 135.4bn
    Enterprise value
    USD 212.7bn
    Less net debt
    USD 69.4bn
    Equity value
    USD 143.4bn

    Exit at 12.2x EBITDA

    Value per shareUSD 140.34

    69% of EV

    Terminal value, undiscounted
    USD 311.1bn
    Terminal value, discounted
    USD 170.4bn
    Enterprise value
    USD 247.7bn
    Less net debt
    USD 69.4bn
    Equity value
    USD 178.4bn

    Spread between methods: 22%.

    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%
    4.54%221.50238.14264.06308.31397.30
    5.54%154.59158.16163.64172.12185.85
    6.54%114.22113.35112.79112.65113.15
    7.54%88.8186.9685.1183.2781.42
    8.54%71.7470.2068.6667.1165.57

    Outlined: this model. Green text: above today's price of 88.51. 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 year7.6%2.8%0.8%
    EBIT margin5.1%3.6%3.1%
    Discount rate-6.5%7.4%
    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.