...

Humana Inc. (HUM) Intrinsic Value

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

Popular:

Humana Inc. (HUM)

View Full Profile →

Intrinsic Value (DCF)

Current$283.95
→
Intrinsic$140.65
-50%
$71.12$140.65$272.78
Market implies 26% growth for 5 years
Current price reflects execution expectations above 13% growth — not unreasonable for quality businesses.
At $284, the market prices in continued strong cash flow growth (26%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $71 → Bull $273. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →9%11%13%15%
8%$184$207$232$259
10%$108$124$141$159
12%$65$77$90$104
14%$38$48$58$68

Bull Case

  • Bull case ($273) with 15% growth, 9% discount rate
  • Conservative 13% growth assumption is achievable based on track record

Bear Case

  • Bear case ($71) implies 75% downside at 10% growth, 12% discount
  • Price reflects 26% growth expectations vs 13% historical — high bar to clear
  • Trading 50% above base case — execution must exceed assumptions to justify
Loading charts...

5-Year Net Income Projection

Year 1$1.36B
Year 2$1.53B
Year 3$1.73B
Year 4$1.94B
Year 5$2.19B
Terminal$32.23B

📐 Model Inputs

Growth Rate12.7%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$1.21BTTM 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.

Related Analysis

Full Stock ProfileCompare HUM vs BRK.BStock Screener

Frequently Asked Questions

Is HUM stock undervalued or overvalued?
🔴 OVERVALUED

HUM trades at $283.95 vs. our DCF-derived intrinsic value of $140.65, implying -50% downside. Using a 10.0% WACC and 12.7% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($233.61) suggests limited upside.

What is HUM's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.21B, projected at 12.7% 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 $9.50B net debt and dividing by 0.12B shares: Bear $73.93 | Base $140.65 | Bull $233.61. Current price $283.95 implies -50% to base case.

How is HUM's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 12.7% 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 ($26.50B).

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: 22.0x.