Cardinal Health, Inc.CAHNYSE

Overview Intelligence Charts News Fundamentals DCF Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

⚠️Model Warnings

•Terminal value represents 89% of enterprise value. Valuation highly sensitive to long-term assumptions.

DCF Valuation Summary

Strong Buy

Fair Value: $3,640.03 per share(market-calibrated)

+1517.9%

Upside to Fair Value

Current

$224.99

Pure Model

$3,985.22

Fair Value

$3,640.03

Bull Case

$5,739.63

Bear Case

$2,756.03

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

0.50%

Calibrated Growth

2.13%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $3,985.22.

What's Driving This Ratingfor CAH

✓

CapEx already efficient

CapEx at 0.21% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 0.38% — below the sector mature average of 20.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $69.8B (13.57% margin).

↑

Strong near-term revenue growth

Analyst consensus projects 16.19% revenue growth in Year 1, fading to 11.94% by Year 5 and 3.00% by Year 10. Revenue reaches $514.0B by Year 10 (vs $222.6B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 250bps below the model's 3.00%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 73.65% indicates efficient cash generation. FCF reaches $52.6B by Year 10 (10.24% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.66

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)7.48%

Cost of Debt

Pre-tax Cost of Debt1.45%

Tax Rate25.32%

After-tax Cost of Debt1.08%

Equity Weight (E/V)85.30%

Debt Weight (D/V)14.70%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (85.30% × 7.48%) + (14.70% × 1.08%)

= 6.54%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$258.6B	$303.9B	$374.3B	$446.8B	$514.0B
EBIT	$991M	$1.2B	$1.4B	$33.3B	$69.8B
Tax	$251M	$295M	$363M	$8.4B	$17.7B
NOPAT	$740M	$869M	$1.1B	$24.8B	$52.1B
+ Depreciation	$859M	$1.0B	$1.2B	$1.5B	$1.7B
- Capex	$541M	$635M	$782M	$934M	$1.1B
- Δ NWC	$220M	$135M	$244M	$211M	$91M
Free Cash Flow	$838M	$1.1B	$1.3B	$25.2B	$52.6B
Discount Factor	0.939	0.827	0.728	0.642	0.531
Present Value	$787M	$917M	$938M	$16.2B	$27.9B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$52.6B

Terminal Growth Rate3.00%

WACC6.54%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$1.5T

PV of Terminal Value$812.1B

Exit Multiple Method

Year 10 EBITDA$71.5B

Exit Multiple (EV/EBITDA)24.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$1.7T

PV of Terminal Value$910.1B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$104.8B

PV of Terminal Value$812.1B

Enterprise Value$916.9B

(-) Net Debt$5.5B

Equity Value$911.4B

Shares Outstanding241M

Price per Share$3,781.88

Exit Multiple Method

PV of Projected FCFs$104.8B

PV of Terminal Value$910.1B

Enterprise Value$1.0T

(-) Net Debt$5.5B

Equity Value$1.0T

Shares Outstanding241M

Price per Share$4,188.56

Pure Model Fair Value

$3,985.22

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.00%	2.50%	3.00%	3.50%	4.00%
4.54%	$5,577.83	$6,282.80	$6,105.14	$5,840.68	$5,588.87
5.54%	$4,355.77	$4,667.55	$5,101.95	$5,749.04	$5,588.87
6.54%	$3,601.57	$3,769.67	$3,985.22	$4,271.63	$4,670.68
7.54%	$3,071.13	$3,172.68	$3,296.57	$3,451.12	$3,649.29
8.54%	$2,668.49	$2,734.53	$2,812.50	$2,905.92	$3,019.92

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$2,756.03

1125.0% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.83

Base Case

$3,985.22

1671.3% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 0.66

Bull Case

$5,739.63

2451.1% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 0.56

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Healthcare Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth16.19%

Year 3 Revenue Growth7.81%

Year 5 Revenue Growth11.94%

Year 7 Revenue Growth8.37%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin0.38%

Terminal EBIT Margin20.00%

Tax Rate25.32%

Historical Capex / Rev0.21%

NWC / Revenue0.61%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 24x EV/EBITDA (Healthcare sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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