Is Quest Diagnostics Incorporated (DGX) overvalued?
On Equity Rank's model estimate, DGX trades close to its fair value (8% below it). Quest Diagnostics Incorporated (DGX) last closed at $255.63; the multi-method model fair value is $277.81.
| Price | Model fair value | Price vs model |
|---|---|---|
| $255.63 | $277.81 | 8% below |
What the answer rests on
- 5 of 12 valuation methods put DGX's value above its price and 7 put it below, so the methods disagree.
- To justify today's price, DGX's free cash flow would need to grow about 2.6% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 1.1% a year.
- DGX trades at 25.5 times its last year's earnings, against a median of 38.3 for 26 profitable Life Sciences Tools companies.
- Over the past year the price sat below the model fair value on 100% of trading days. The gap ranged from 15% below to 0% below 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 DGX's fair value · What prices assume · Other companies