Chemed Corporation (CHE) — DCF Valuation

Discounted Cash Flow intrinsic value with Bear, Base & Bull scenarios

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Chemed Corporation (CHE)

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Intrinsic Value (DCF)

Current$410.01

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Intrinsic$411.92

+0%

$280.29$411.92$662.14

Market implies 8% growth for 5 years

Growth 8%

Discount 10%

Terminal 3%

CHE appears fairly valued — current price aligns with our DCF estimate.

At $410, the market prices in 8% annual cash flow growth — a moderate expectation aligned with historical trends (8%).

Range: Bear $280 → Bull $662. Current price implies expectations near the base case.

Discount ↓Growth →	4%	6%	8%	10%
8%	$490	$535	$583	$635
10%	$348	$379	$412	$448
12%	$269	$292	$317	$344
14%	$219	$237	$257	$278

Bull Case

Bull case ($662) offers 61% upside at 10% growth, 9% discount
0% margin of safety vs. base case estimate
Market-implied growth (8%) ≤ historical CAGR (8%)

Bear Case

Bear case ($280) implies 32% downside at 7% growth, 12% discount

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5-Year Free Cash Flow Projection

Year 1$352.71M

Year 2$382.21M

Year 3$414.19M

Year 4$448.83M

Year 5$486.38M

Terminal$7.16B

📐 Model Inputs

Growth Rate8.4%5Y CAGR (cascade: 5Y→3Y→TTM)

Discount Rate10.0%WACC estimate

Terminal Growth3.0%Perpetuity rate

Base Free Cash Flow$325.48MTTM actual

Bear g×0.8, r+2%

Base Historical CAGR

Bull g×1.2, r−1.5%

ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

Frequently Asked Questions

Is CHE stock undervalued or overvalued?

🟡 FAIRLY VALUED

CHE trades at $410.01, within 10% of our $449.15 intrinsic value estimate. At 10.0% WACC and 8.4% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $324.99 (bear) to $615.75 (bull).

What is CHE's intrinsic value?

Using a 5-year DCF model: Base FCF of $325M, projected at 8.4% 5Y CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $69M net debt and dividing by 0.01B shares: Bear $324.99 | Base $449.15 | Bull $615.75. Current price $410.01 implies +2% to base case.

How is CHE's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.4% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($6.54B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 20.1x.

Our Methodology

Institutional-grade research documentation

DCF Intrinsic Value Methodology

Eligibility gates, reinvestor-aware FCF normalization, WACC logic, and sensitivity analysis.

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Chemed Corporation (CHE) — DCF Valuation