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The Ensign Group, Inc. (ENSG) Intrinsic Value

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

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The Ensign Group, Inc. (ENSG)

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Intrinsic Value (DCF)

Current$183.54
→
Intrinsic$72.93
-60%
$41.42$72.93$132.74
Current price reflects execution expectations above 21% growth — not unreasonable for quality businesses.
Range: Bear $41 → Bull $133. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $133).
Discount ↓Growth →17%19%21%23%
8%$95$105$115$127
10%$59$66$73$81
12%$39$44$49$55
14%$26$30$35$39

Bull Case

  • Bull case ($133) with 25% growth, 9% discount rate

Bear Case

  • Bear case ($41) implies 77% downside at 17% growth, 12% discount
  • Trading 60% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($133) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$228.72M
Year 2$276.86M
Year 3$335.14M
Year 4$405.68M
Year 5$491.07M
Terminal$7.23B

📐 Model Inputs

Growth Rate21.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$188.95MTTM 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.

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Frequently Asked Questions

Is ENSG stock undervalued or overvalued?
🔴 OVERVALUED

ENSG trades at $183.54 vs. our DCF-derived intrinsic value of $69.05, implying -62% downside. Using a 10.0% WACC and 21.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($117.18) suggests limited upside.

What is ENSG's intrinsic value?

Using a 5-year DCF model: Base FCF of $189M, projected at 21.0% 5Y CAGR (best of revenue, EPS, or FCF growth), 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 $1.51B net debt and dividing by 0.06B shares: Bear $36.37 | Base $69.05 | Bull $117.18. Current price $183.54 implies -62% to base case.

How is ENSG's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 21.0% 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 ($5.53B).

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: 29.3x.