DCF Studio

    UHS · NYQ · Healthcare

    Universal Health Services, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 264.51

    Market price

    USD 180.65

    Implied upside

    +46.4%

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

    AdjustedCapital expenditure runs at 5.7% of revenue against depreciation of 3.9%. 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 264.51+46.4%
    Exit multiple
    USD 204.33+13.1%
    Market price
    USD 180.65

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 18.6bnUSD 19.5bnUSD 20.4bnUSD 21.3bnUSD 22.1bnUSD 22.9bnUSD 23.7bnUSD 24.4bnUSD 25.1bnUSD 25.7bn+3.7%
    EBITUSD 1.8bnUSD 1.8bnUSD 1.9bnUSD 2.0bnUSD 2.1bnUSD 2.2bnUSD 2.2bnUSD 2.3bnUSD 2.4bnUSD 2.4bn+3.7%
    NOPATUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.6bnUSD 1.7bnUSD 1.7bnUSD 1.8bnUSD 1.8bnUSD 1.9bnUSD 1.9bn+3.7%
    Add depreciation & amortisationUSD 724.8mUSD 759.9mUSD 794.4mUSD 828.2mUSD 861.0mUSD 892.6mUSD 922.8mUSD 951.2mUSD 977.8mUSD 1.0bn+3.7%
    Less capital expenditureUSD -1.1bnUSD -1.1bnUSD -1.2bnUSD -1.2bnUSD -1.3bnUSD -1.3bnUSD -1.4bnUSD -1.4bnUSD -1.4bnUSD -1.5bn+3.8%
    Capex, % of revenue5.7%5.7%5.7%5.7%5.7%5.7%5.7%5.7%5.7%5.7%-
    Less increase in working capitalUSD -149.1mUSD -107.8mUSD -106.2mUSD -103.9mUSD -100.9mUSD -97.1mUSD -92.7mUSD -87.5mUSD -81.6mUSD -75.1m-7.3%
    Free cashflow to firmUSD 913.1mUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.4bn+4.6%
    Discount factor0.96350.89450.83040.77090.71570.66450.61690.57270.53170.4936-
    Present valueUSD 879.8mUSD 898.2mUSD 875.7mUSD 851.4mUSD 825.5mUSD 798.1mUSD 769.5mUSD 739.8mUSD 709.2mUSD 678.0m-
    Present Value Of The ForecastUSD 8.0bn

    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
    Beta1.072Reported 1.108, pulled toward 1.0 (Blume)
    Cost of equity9.43%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 13.1x interest cover. Book interest / average debt was lower, at 3.0%.
    Market capitalisationUSD 10.6bn67.3% of capital
    Total debtUSD 5.2bn32.7% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.72%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 264.51

    64% of EV

    Forecast FCFF, final year
    USD 1.4bn
    Capex at depreciation, working capital in reinvestment
    USD 1.9bn
    Less reinvestment at g/ROIC (24.6% of NOPAT)
    USD -473.8m
    Capitalised
    USD 1.4bn
    ROIC (reported)
    10.1%
    Terminal value, undiscounted
    USD 28.5bn
    Terminal value, discounted
    USD 14.1bn
    Enterprise value
    USD 22.1bn
    Less net debt
    USD 5.0bn
    Equity value
    USD 17.1bn

    Exit at 6.0x EBITDA

    Value per shareUSD 204.33

    56% of EV

    Terminal value, undiscounted
    USD 20.6bn
    Terminal value, discounted
    USD 10.2bn
    Enterprise value
    USD 18.2bn
    Less net debt
    USD 5.0bn
    Equity value
    USD 13.2bn

    Spread between methods: 26%.

    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%
    5.72%428.48450.61480.80523.51587.19
    6.72%327.66335.88346.90361.84382.55
    7.72%259.55261.52264.51268.85275.02
    8.72%210.55209.48208.75208.46208.73
    9.72%173.64171.07168.55166.12163.78

    Outlined: this model. Green text: above today's price of 180.65. 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 year9.0%4.0%0.4%
    EBIT margin11.5%9.5%7.4%
    Discount rate-7.7%9.4%
    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.