Is CVS Health Corp (CVS) overvalued?
On Equity Rank's model estimate, CVS trades close to its fair value (6% below it). CVS Health Corp (CVS) last closed at $83.85; the multi-method model fair value is $89.19.
| Price | Model fair value | Price vs model |
|---|---|---|
| $83.85 | $89.19 | 6% below |
What the answer rests on
- 5 of 11 valuation methods put CVS's value above its price and 6 put it below, so the methods disagree.
- To justify today's price, CVS's free cash flow would need to grow about -3.3% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew -16.6% a year.
- CVS trades at 9.3 times its last year's earnings, against a median of 39.8 for 14 profitable Managed Care companies.
- Over the past year the price sat below the model fair value on 59% of trading days. The gap ranged from 21% below to 69% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind CVS's fair value · What prices assume · Other companies