Using an unlevered Free Cash Flow to Firm (FCFF) model, we project CVS Health Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 0.7% to 4.3% 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 34, DPO 28, DIO 23). At a 6.0% WACC with mid-year discounting, the terminal value (78% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 10.9x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $510.87 per share, suggesting CVS is undervalued by 613.8% at the current price of $71.56.
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 | 50,694 | 53,164 | 56,046 | 59,495 | 62,026 | 63,577 |
| (−) Net Interest | 3,142 | 3,295 | 3,473 | 3,687 | 3,844 | 3,940 |
| (+) D&A | 2,778 | 2,923 | 3,058 | 3,170 | 3,375 | 3,460 |
| EBITDA | 56,613 | 59,382 | 62,578 | 66,352 | 69,246 | 70,977 |
| (−) Tax | 12,131 | 12,722 | 13,412 | 14,237 | 14,843 | — |
| (−) CapEx | 3,245 | 3,403 | 3,588 | 3,809 | 3,971 | — |
| (−) ΔWC | 33,401 | 1,610 | 1,879 | 2,248 | 1,650 | — |
| Free Cash Flow (FCF) | 7,836 | 41,646 | 43,700 | 46,058 | 48,782 | — |
| Peers' EBITDA Multiple | 10.9x | |||||
| Terminal Value | 771,517 | |||||
| WACC / Discount Rate | 6.02% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 7,611 | 38,151 | 37,760 | 37,539 | 37,502 | 576,031 |
| Enterprise Value | 734,593 | |||||
| Projection Period | 158,561 | 21.6% | ||||
| Terminal Value | 576,031 | 78.4% | ||||
| (−) Current Net Debt | 85,081 | |||||
| Equity Value | 649,512 | |||||
| (÷) Outstanding Shares | 1271M | |||||
| Fair Price | $511 | +614.1% | ||||
| WACC \ EV/EBITDA Exit Multiple | 6.9x | 8.9x | 10.9x | 12.9x | 14.9x |
|---|---|---|---|---|---|
| 4.0% | $380 | $471 | $563 | $655 | $747 |
| 5.0% | $361 | $449 | $536 | $624 | $711 |
| 6.0% | $344 | $427 | $511 | $594 | $678 |
| 7.0% | $328 | $407 | $487 | $566 | $646 |
| 8.0% | $312 | $388 | $464 | $540 | $616 |
Current price: $71.56. 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.