Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Universal Health Services, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 6.4% to 8.3% 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 54, DPO 157, DIO 52). At a 6.5% WACC with mid-year discounting, the terminal value (74% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 9.4x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $1397.11 per share, suggesting UHS is undervalued by 647.4% at the current price of $186.92.
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 | 7,187 | 7,541 | 7,908 | 7,991 | 8,651 | 8,867 |
| (−) Net Interest | 191 | 200 | 210 | 212 | 230 | 236 |
| (+) D&A | 858 | 903 | 984 | 1,073 | 1,125 | 1,153 |
| EBITDA | 8,237 | 8,645 | 9,102 | 9,276 | 10,005 | 10,255 |
| (−) Tax | 1,682 | 1,765 | 1,851 | 1,870 | 2,025 | — |
| (−) CapEx | 1,081 | 1,134 | 1,190 | 1,202 | 1,301 | — |
| (−) ΔWC | 90 | 107 | 111 | 25 | 200 | — |
| Free Cash Flow (FCF) | 5,383 | 5,638 | 5,950 | 6,178 | 6,479 | — |
| Peers' EBITDA Multiple | 9.4x | |||||
| Terminal Value | 96,197 | |||||
| WACC / Discount Rate | 6.51% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 5,216 | 5,129 | 5,082 | 4,955 | 4,879 | 70,187 |
| Enterprise Value | 95,449 | |||||
| Projection Period | 25,262 | 26.5% | ||||
| Terminal Value | 70,187 | 73.5% | ||||
| (−) Current Net Debt | 5,369 | |||||
| Equity Value | 90,080 | |||||
| (÷) Outstanding Shares | 64M | |||||
| Fair Price | $1397 | +647.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 5.4x | 7.4x | 9.4x | 11.4x | 13.4x |
|---|---|---|---|---|---|
| 4.5% | $1014 | $1269 | $1524 | $1779 | $2035 |
| 5.5% | $972 | $1216 | $1459 | $1702 | $1946 |
| 6.5% | $933 | $1165 | $1397 | $1629 | $1861 |
| 7.5% | $895 | $1117 | $1339 | $1560 | $1782 |
| 8.5% | $860 | $1071 | $1283 | $1495 | $1706 |
Current price: $186.92. 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.