UnitedHealth Group Incorporated (UNH) Intrinsic Value

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

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UnitedHealth Group Incorporated (UNH)

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Intrinsic Value (DCF)

Current$333.93

→

Intrinsic$282.31

-15%

$171.25$282.31$503.34

Market implies 14% growth for 5 years

Growth 11%

Discount 10%

Terminal 3%

UNH trades at a premium to our conservative estimate — investors expect above-average performance.

At $334, the market prices in 14% annual cash flow growth — a moderate expectation aligned with historical trends (11%).

Range: Bear $171 → Bull $503. Current price implies expectations above the base case, closer to bull expectations.

Discount ↓Growth →	7%	9%	11%	13%
8%	$360	$397	$438	$481
10%	$231	$256	$282	$311
12%	$162	$181	$200	$221
14%	$120	$134	$150	$166

Bull Case

Bull case ($503) offers 51% upside at 13% growth, 8% discount
Conservative 11% growth assumption is achievable based on track record

Bear Case

Bear case ($171) implies 49% downside at 8% growth, 12% discount
Price reflects 14% growth expectations vs 11% historical — high bar to clear
Trading 15% above base case — execution must exceed assumptions to justify

Intrinsic Value vs Current Price

5-Year Cash Flow Projection

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5-Year Net Income Projection

Year 1$15.93B

Year 2$17.61B

Year 3$19.47B

Year 4$21.53B

Year 5$23.81B

Terminal$377.32B

📐 Model Inputs

Growth Rate10.6%5Y CAGR (cascade: 5Y→3Y→TTM)

Discount Rate9.5%WACC estimate

Terminal Growth3.0%Perpetuity rate

Base Net Income$14.40BTTM 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.

Frequently Asked Questions

Is UNH stock undervalued or overvalued?

🔴 OVERVALUED

UNH trades at $333.93 vs. our DCF-derived intrinsic value of $282.31, implying -19% downside. Using a 9.5% WACC and 10.6% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($427.75) suggests limited upside.

What is UNH's intrinsic value?

Using a 5-year DCF model: Base FCF of $14.40B, projected at 10.6% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $51.59B net debt and dividing by 0.93B shares: Bear $179.51 | Base $282.31 | Bull $427.75. Current price $333.93 implies -19% to base case.

How is UNH's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 10.6% 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=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($313.85B).

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: 21.8x.

UnitedHealth Group Incorporated (UNH) Intrinsic Value