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Universal Health Services, Inc. (UHS) Intrinsic Value

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

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Universal Health Services, Inc. (UHS)

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Intrinsic Value (DCF)

Current$204.19
→
Intrinsic$297.08
+45%
$180.27$297.08$519.02
Market implies 6% growth for 5 years
DCF analysis suggests UHS could have 45% upside at 13% growth — verify assumptions match your view.
At $204, the market prices in only 6% growth — below historical 13%, suggesting low expectations.
Range: Bear $180 → Bull $519. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →9%11%13%15%
8%$371$410$451$496
10%$242$269$297$328
12%$170$190$212$235
14%$125$141$158$176

Bull Case

  • Bull case ($519) offers 154% upside at 16% growth, 9% discount
  • 31% margin of safety vs. base case estimate
  • Market-implied growth (6%) ≤ historical CAGR (13%)

Bear Case

  • Bear case ($180) implies 12% downside at 10% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$1.27B
Year 2$1.43B
Year 3$1.62B
Year 4$1.83B
Year 5$2.07B
Terminal$30.45B

📐 Model Inputs

Growth Rate13.0%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 UHS stock undervalued or overvalued?
🟢 UNDERVALUED

UHS trades at $204.19 vs. our DCF-derived intrinsic value of $297.08, implying +34% upside. At a 10.0% WACC and 13.0% projected FCF growth, the market appears to be underpricing the present value of UHS's future cash flows. The bear case ($184.29) still suggests upside, providing margin of safety.

What is UHS's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.12B, projected at 13.0% 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 $4.83B net debt and dividing by 0.07B shares: Bear $184.29 | Base $297.08 | Bull $454.64. Current price $204.19 implies +34% to base case.

How is UHS's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 13.0% 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 ($25.00B).

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.