CVS Health Corporation (CVS)
Valuation Overview•Is CVS Health Corporation Overvalued or Undervalued?
The market is pricing the stock in line with historical averages, assuming steady-state growth.
Fragile underlying quality score of 29/100; weak margins or elevated debt leverage warrant caution.
Wall Street forecasts a balanced outlook with consensus price targets near the current price.
Verdict: Highly distressed profile flashing severe fundamental warning signs.
Wall Street is broadly bullish, projecting solid upside alongside robust expected earnings growth. This is paired with healthy capital returns, anchored by a strong, well-covered dividend yield.
CVS struggles with subpar profitability and pressured margins. However, this is severely offset by a highly leveraged balance sheet (Debt/EBITDA > 4.0x) and elevated financial risk.
The company demonstrates solid revenue growth (7.6% 3Y CAGR) however, earnings have severely contracted over the same period. However, profitability remains a major concern with severely compressed operating margins (1.5%).
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $100.4B | +7.8% | +7.6% | +8.4% | +10.1% | |
| EBITDA | $5.8B | — | +7.2% | — | — | |
| Net Income | $2.9B | -61.7% | -25.7% | — | -10.3% | |
| EPS (Diluted) | $2.30 | -62.0% | -24.7% | -23.9% | -11.3% | |
| Free Cash Flow | $3.4B | +23.4% | -16.6% | -10.3% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 13.9% | 14.3% | 15.5% | 16.1% |
| Operating Margin | 1.5% | 2.9% | 3.1% | 3.9% |
| Net Margin | 0.7% | 1.3% | 1.6% | 2.0% |
| FCF Margin | 1.8% | 2.2% | 3.2% | 3.6% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $2.18 | $2.57 | +17.9% | ||
| Q1'26 | $1.00 | $1.09 | +9.0% | ||
| Q4'25 | $1.37 | $1.60 | +16.8% | ||
| Q3'25 | $1.46 | $1.81 | +24.0% | ||
| Q2'25 | $1.70 | $2.25 | +32.4% | ||
| Q1'25 | $0.91 | $1.19 | +30.2% | ||
| Q4'24 | $1.44 | $1.09 | -24.3% | ||
| Q3'24 | $1.73 | $1.83 | +5.8% |
Total return is +51.1% (1Y), outperforming the benchmark by +26.1%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +24.4% | +15.1% | — |
| 1Y | +51.1% | +26.1% | +4.0% |
| 3YCAGR | +15.6% | -3.6% | +11.4% |
| 5YCAGR | +6.1% | -6.7% | +14.9% |
| 10YCAGR | +2.6% | -11.2% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about CVS Health Corporation (CVS) valuation, health, and returns.
CVS Health Corporation is estimated to be fair under our discounted cash flow framework. relative multiples indicate the stock is Fair versus peers compared to industry peers. trading near fair value (DCF: $91.34)
CVS Health Corporation has multiple valuation anchors: DCF Intrinsic Value: $91.34 | Peer Relative Fair Value: $100.39 | Wall Street Analyst Target: $103.64 (implying +5.4% upside). A convergence of these signals offers higher conviction.
CVS Health Corporation displays weak financial health with a composite quality score of 29/100, supported by a Piotroski F-Score of 5/9, Return on Invested Capital (ROIC) of 5.0%.
CVS Health Corporation pays a 2.7% dividend yield, covered by a 192% payout ratio with 0 years of growth, supplemented by a 0.0% buyback yield.
CVS Health Corporation's current growth trajectory is Stable. The company achieved +7.8% 1Y revenue growth and -62.0% 1Y EPS growth, compared to its 3Y revenue CAGR of +7.6%.
Wall Street consensus is Buy based on 41 analysts, beating EPS expectations in 83% of recent quarters with a 6-quarter streak. The consensus price target represents a +5.4% change from current levels.
Investment risks for CVS Health Corporation include: -16.4% 1-year max drawdown, stretched payout ratio. Volatility risk is characterized by a beta of 0.18x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.