Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Humana Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 23.9% to 6.1% 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 8, DPO 40, DIO 60). At a 7.0% WACC with mid-year discounting, the terminal value (86% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 16.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $2837.07 per share, suggesting HUM is undervalued by 1528.5% at the current price of $174.21.
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 | 17,519 | 18,615 | 19,972 | 21,020 | 22,298 | 22,855 |
| (−) Net Interest | 749 | 796 | 854 | 899 | 953 | 977 |
| (+) D&A | 921 | 953 | 1,045 | 1,187 | 1,433 | 1,469 |
| EBITDA | 19,189 | 20,364 | 21,871 | 23,106 | 24,684 | 25,301 |
| (−) Tax | 3,621 | 3,847 | 4,128 | 4,344 | 4,608 | — |
| (−) CapEx | 1,504 | 1,598 | 1,714 | 1,804 | 1,914 | — |
| (−) ΔWC | 17,419 | 681 | 842 | 651 | 793 | — |
| Free Cash Flow (FCF) | -3,354 | 14,239 | 15,187 | 16,306 | 17,369 | — |
| Peers' EBITDA Multiple | 16.8x | |||||
| Terminal Value | 425,312 | |||||
| WACC / Discount Rate | 6.99% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -3,243 | 12,866 | 12,825 | 12,871 | 12,813 | 303,330 |
| Enterprise Value | 351,462 | |||||
| Projection Period | 48,132 | 13.7% | ||||
| Terminal Value | 303,330 | 86.3% | ||||
| (−) Current Net Debt | 8,737 | |||||
| Equity Value | 342,725 | |||||
| (÷) Outstanding Shares | 121M | |||||
| Fair Price | $2837 | +1528.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 12.8x | 14.8x | 16.8x | 18.8x | 20.8x |
|---|---|---|---|---|---|
| 5.0% | $2454 | $2782 | $3110 | $3438 | $3767 |
| 6.0% | $2344 | $2657 | $2970 | $3283 | $3596 |
| 7.0% | $2240 | $2538 | $2837 | $3136 | $3434 |
| 8.0% | $2141 | $2426 | $2711 | $2997 | $3282 |
| 9.0% | $2048 | $2320 | $2592 | $2865 | $3137 |
Current price: $174.21. 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.