Is Humana Inc (HUM) overvalued?
On Equity Rank's model estimate, HUM trades 24% above its fair value. Humana Inc (HUM) last closed at $433.74; the multi-method model fair value is $350.84.
| Price | Model fair value | Price vs model |
|---|---|---|
| $433.74 | $350.84 | 24% above |
What the answer rests on
- 2 of 12 valuation methods put HUM's value above its price and 10 put it below, so the methods mostly agree.
- To justify today's price, HUM's free cash flow would need to grow about 27.9% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew -52.3% a year.
- HUM trades at 39.5 times its last year's earnings, against a median of 39.7 for 14 profitable Managed Care companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 4% above to 32% 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 HUM's fair value · What prices assume · Other companies