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Omega Healthcare Investors, Inc. (OHI) Intrinsic Value

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

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Omega Healthcare Investors, Inc. (OHI)

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Intrinsic Value (DCF)

Current$44.48
→
Intrinsic$60.98
+37%
$36.47$60.98$107.53
Market implies 14% growth for 5 years
DCF analysis suggests OHI could have 37% upside at 20% growth — verify assumptions match your view.
At $44, the market prices in 14% annual cash flow growth — a moderate expectation aligned with historical trends (20%).
Range: Bear $36 → Bull $108. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →16%18%20%22%
8%$78$86$94$103
10%$50$55$61$67
12%$35$38$43$47
14%$25$28$31$35

Bull Case

  • Bull case ($108) offers 142% upside at 24% growth, 9% discount
  • 27% margin of safety vs. base case estimate
  • Market-implied growth (14%) ≤ historical CAGR (20%)

Bear Case

  • Bear case ($36) implies 18% downside at 16% growth, 12% discount
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5-Year FFO Projection

Year 1$853.17M
Year 2$1.02B
Year 3$1.23B
Year 4$1.47B
Year 5$1.77B
Terminal$26.03B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base FFO$710.97MTTM 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 FFO per NAREIT standards. See FAQ below for full methodology.

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Frequently Asked Questions

Is OHI stock undervalued or overvalued?
🟢 UNDERVALUED

OHI trades at $44.48 vs. our DCF-derived intrinsic value of $60.98, implying +37% upside. At a 10.0% WACC and 20.0% projected FCF growth, the market appears to be underpricing the present value of OHI's future cash flows. The bear case ($34.50) still suggests upside, providing margin of safety.

What is OHI's intrinsic value?

Using a 5-year DCF model: Base FCF of $711M, projected at 20.0% 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 $4.32B net debt and dividing by 0.27B shares: Bear $34.50 | Base $60.98 | Bull $99.98. Current price $44.48 implies +37% to base case.

How is OHI's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% 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 ($20.81B).

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.