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Elevance Health Inc. (ELV) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Elevance Health Inc. (ELV)

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Intrinsic Value (DCF)

Current$370.68
→
Intrinsic$474.30
+28%
$285.90$474.30$849.23
Market implies 6% growth for 5 years
ELV shows 28% potential upside using 11% growth — reasonable if fundamentals hold.
At $371, the market prices in only 6% growth — below historical 11%, suggesting low expectations.
Range: Bear $286 → Bull $849. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →7%9%11%13%
8%$607$670$738$811
10%$387$429$474$523
12%$271$302$335$371
14%$199$223$249$277

Bull Case

  • Bull case ($849) offers 129% upside at 13% growth, 8% discount
  • 22% margin of safety vs. base case estimate
  • Market-implied growth (6%) ≤ historical CAGR (11%)

Bear Case

  • Bear case ($286) implies 23% downside at 9% growth, 12% discount
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5-Year Net Income Projection

Year 1$6.65B
Year 2$7.39B
Year 3$8.21B
Year 4$9.13B
Year 5$10.15B
Terminal$160.77B

📐 Model Inputs

Growth Rate11.2%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$5.98BTTM 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. Uses Net Income (FCF not meaningful for insurers). See FAQ below for full methodology.

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Frequently Asked Questions

Is ELV stock undervalued or overvalued?
🟢 UNDERVALUED

ELV trades at $370.68 vs. our DCF-derived intrinsic value of $474.30, implying +28% upside. At a 9.5% WACC and 11.2% projected FCF growth, the market appears to be underpricing the present value of ELV's future cash flows. The bear case ($298.02) still suggests upside, providing margin of safety.

What is ELV's intrinsic value?

Using a 5-year DCF model: Base FCF of $5.98B, projected at 11.2% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $22.94B net debt and dividing by 0.23B shares: Bear $298.02 | Base $474.30 | Bull $724.92. Current price $370.68 implies +28% to base case.

How is ELV's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 11.2% 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=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($133.41B).

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: 22.3x.