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Tenet Healthcare Corporation (THC) Intrinsic Value

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

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Tenet Healthcare Corporation (THC)

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Intrinsic Value (DCF)

Current$201.32
→
Intrinsic$287.40
+43%
$158.80$287.40$531.38
Market implies 19% growth for 5 years
DCF analysis suggests THC could have 43% upside at 25% growth — verify assumptions match your view.
At $201, the market prices in continued high-teens cash flow growth (19%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $159 → Bull $531. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →21%23%25%27%
8%$380$420$463$508
10%$231$258$287$318
12%$149$169$191$214
14%$97$113$129$147

Bull Case

  • Bull case ($531) offers 164% upside at 30% growth, 9% discount
  • 30% margin of safety vs. base case estimate
  • Market-implied growth (19%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($159) implies 21% downside at 20% growth, 12% discount
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$1.40B
Year 2$1.74B
Year 3$2.18B
Year 4$2.72B
Year 5$3.41B
Terminal$50.11B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.12BTTM 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 THC stock undervalued or overvalued?
🟡 FAIRLY VALUED

THC trades at $201.32, within 10% of our $218.25 intrinsic value estimate. At 10.0% WACC and 25.0% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $103.40 (bear) to $387.39 (bull).

What is THC's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.12B, projected at 25.0% 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 $11.31B net debt and dividing by 0.10B shares: Bear $103.40 | Base $218.25 | Bull $387.39. Current price $201.32 implies +5% to base case.

How is THC's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% 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 ($32.67B).

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.