DCF Studio

    HUM · NYQ · Healthcare

    Humana Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 656.61

    Market price

    USD 410.41

    Implied upside

    +60.0%

    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 0.77% 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. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    USD 656.61+60.0%
    Exit multiple
    USD 802.98+95.7%
    Market price
    USD 410.41

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn4bn8bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 162.8bnUSD 168.7bnUSD 174.6bnUSD 180.4bnUSD 186.1bnUSD 191.8bnUSD 197.4bnUSD 202.9bnUSD 208.3bnUSD 213.5bn+3.1%
    EBITUSD 4.7bnUSD 4.9bnUSD 5.1bnUSD 5.2bnUSD 5.4bnUSD 5.6bnUSD 5.7bnUSD 5.9bnUSD 6.1bnUSD 6.2bn+3.1%
    NOPATUSD 3.7bnUSD 3.9bnUSD 4.0bnUSD 4.1bnUSD 4.3bnUSD 4.4bnUSD 4.5bnUSD 4.7bnUSD 4.8bnUSD 4.9bn+3.1%
    Add depreciation & amortisationUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.6bnUSD 1.6bnUSD 1.7bnUSD 1.7bn+3.1%
    Less capital expenditureUSD -1.6bnUSD -1.8bnUSD -1.9bnUSD -2.0bnUSD -2.2bnUSD -2.4bnUSD -2.5bnUSD -2.7bnUSD -2.8bnUSD -3.0bn+7.0%
    Capex, % of revenue1.0%1.0%1.1%1.1%1.2%1.2%1.3%1.3%1.4%1.4%-
    Less increase in working capitalUSD 4.1bnUSD 731.1mUSD 728.3mUSD 723.4mUSD 716.3mUSD 707.0mUSD 695.4mUSD 681.6mUSD 665.4mUSD 646.9m+18.6%
    Free cashflow to firmUSD 7.5bnUSD 4.2bnUSD 4.2bnUSD 4.3bnUSD 4.3bnUSD 4.3bnUSD 4.3bnUSD 4.3bnUSD 4.3bnUSD 4.3bn-6.1%
    Discount factor0.96490.89840.83650.77890.72520.67520.62870.58540.54500.5075-
    Present valueUSD 7.3bnUSD 3.8bnUSD 3.5bnUSD 3.3bnUSD 3.1bnUSD 2.9bnUSD 2.7bnUSD 2.5bnUSD 2.3bnUSD 2.2bn-
    Present Value Of The ForecastUSD 33.7bn

    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
    Beta0.761Reported 0.643, pulled toward 1.0 (Blume)
    Cost of equity8.11%Risk-free + beta x equity risk premium
    Cost of debt5.78%Risk-free + 89bp, the spread for a A- rating at 3.5x interest cover. Book interest / average debt was lower, at 5.2%.
    Market capitalisationUSD 49.3bn79.9% of capital
    Total debtUSD 12.4bn20.1% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.40%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 656.61

    53% of EV

    Forecast FCFF, final year
    USD 4.3bn
    Capex at depreciation, working capital in reinvestment
    USD 5.0bn
    Less reinvestment at g/ROIC (28.3% of NOPAT)
    USD -1.4bn
    Capitalised
    USD 3.6bn
    ROIC (reported)
    8.8%
    Terminal value, undiscounted
    USD 75.1bn
    Terminal value, discounted
    USD 38.1bn
    Enterprise value
    USD 71.8bn
    Less net debt
    USD -7.5bn
    Equity value
    USD 79.3bn

    Exit at 13.9x EBITDA

    Value per shareUSD 802.98

    62% of EV

    Terminal value, undiscounted
    USD 110.0bn
    Terminal value, discounted
    USD 55.8bn
    Enterprise value
    USD 89.5bn
    Less net debt
    USD -7.5bn
    Equity value
    USD 97.0bn

    Spread between methods: 20%.

    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%
    5.40%922.26954.851000.811068.501175.05
    6.40%761.72771.46785.20804.70832.95
    7.40%655.04655.24656.61659.55664.66
    8.40%578.87574.77570.88567.23563.90
    9.40%525.06520.40515.73511.07506.40

    Outlined: this model. Green text: above today's price of 410.41. 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 year11.8%5.1%0.1%
    EBIT margin4.3%2.9%1.5%
    Discount rate-7.4%12.6%
    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.