Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Centene Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -2.6% to 2.1% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 37, DPO 35, DIO 60). At a 6.0% WACC with mid-year discounting, the terminal value (120% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 10.2x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $109.01 per share, suggesting CNC is undervalued by 227.1% at the current price of $33.33.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 6,129 | 6,134 | 6,322 | 6,340 | 6,471 | 6,632 |
| (−) Net Interest | 849 | 850 | 876 | 878 | 897 | 919 |
| (+) D&A | 825 | 850 | 856 | 909 | 995 | 1,019 |
| EBITDA | 7,803 | 7,834 | 8,053 | 8,128 | 8,362 | 8,571 |
| (−) Tax | 1,726 | 1,728 | 1,780 | 1,786 | 1,822 | — |
| (−) CapEx | 1,034 | 1,035 | 1,067 | 1,070 | 1,092 | — |
| (−) ΔWC | 33,208 | 25 | 941 | 92 | 657 | — |
| Free Cash Flow (FCF) | -28,165 | 5,046 | 4,265 | 5,181 | 4,791 | — |
| Peers' EBITDA Multiple | 10.2x | |||||
| Terminal Value | 87,679 | |||||
| WACC / Discount Rate | 5.98% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -27,358 | 4,625 | 3,688 | 4,227 | 3,688 | 65,566 |
| Enterprise Value | 54,436 | |||||
| Projection Period | -11,129 | -20.4% | ||||
| Terminal Value | 65,566 | 120.4% | ||||
| (−) Current Net Debt | 889 | |||||
| Equity Value | 53,547 | |||||
| (÷) Outstanding Shares | 491M | |||||
| Fair Price | $109 | +227.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 6.2x | 8.2x | 10.2x | 12.2x | 14.2x |
|---|---|---|---|---|---|
| 4.0% | $66 | $95 | $124 | $152 | $181 |
| 5.0% | $61 | $89 | $116 | $144 | $171 |
| 6.0% | $57 | $83 | $109 | $135 | $161 |
| 7.0% | $52 | $77 | $102 | $127 | $152 |
| 8.0% | $48 | $72 | $96 | $120 | $143 |
Current price: $33.33. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.