Molina Healthcare, Inc.MOHNYSE

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

DCF Valuation

⚠️Model Warnings

•Terminal value represents 88% of enterprise value. Valuation highly sensitive to long-term assumptions.

DCF Valuation Summary

Strong Buy

Fair Value: $2,967.02 per share(market-calibrated)

+1951.8%

Upside to Fair Value

Current

$144.61

Pure Model

$3,418.84

Fair Value

$2,967.02

Bull Case

$4,119.76

Bear Case

$2,825.49

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: $3,418.84.

What's Driving This Ratingfor MOH

✓

CapEx already efficient

CapEx at 0.20% 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 3.56% — below the sector mature average of 20.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $8.8B (14.61% margin).

→

Moderate revenue growth

Analyst consensus projects -0.22% revenue growth, fading to 3.00% by Year 10. Revenue reaches $60.5B (vs $45.4B 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 79.08% indicates efficient cash generation. FCF reaches $7.2B by Year 10 (11.85% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.49

Market Risk Premium4.50%

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

Cost of Equity (Re)6.72%

Cost of Debt

Pre-tax Cost of Debt3.29%

Tax Rate19.86%

After-tax Cost of Debt2.63%

Equity Weight (E/V)65.03%

Debt Weight (D/V)34.97%

WACC Calculation

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

WACC = (65.03% × 6.72%) + (34.97% × 2.63%)

= 5.50%

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	$45.3B	$51.1B	$54.2B	$56.0B	$60.5B
EBIT	$1.6B	$1.8B	$1.9B	$5.3B	$8.8B
Tax	$320M	$361M	$383M	$1.1B	$1.8B
NOPAT	$1.3B	$1.5B	$1.5B	$4.3B	$7.1B
+ Depreciation	$171M	$193M	$205M	$212M	$229M
- Capex	$90M	$102M	$108M	$112M	$121M
- Δ NWC	-$1M	$31M	$6M	$12M	$21M
Free Cash Flow	$1.4B	$1.5B	$1.6B	$4.3B	$7.2B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$1.3B	$1.3B	$1.3B	$3.0B	$4.2B

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$7.2B

Terminal Growth Rate3.00%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$295.2B

PV of Terminal Value$172.8B

Exit Multiple Method

Year 10 EBITDA$9.1B

Exit Multiple (EV/EBITDA)24.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$217.5B

PV of Terminal Value$127.3B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$23.3B

PV of Terminal Value$172.8B

Enterprise Value$196.1B

(-) Net Debt-$298M

Equity Value$196.4B

Shares Outstanding51M

Price per Share$3,866.93

Exit Multiple Method

PV of Projected FCFs$23.3B

PV of Terminal Value$127.3B

Enterprise Value$150.6B

(-) Net Debt-$298M

Equity Value$150.9B

Shares Outstanding51M

Price per Share$2,970.75

Pure Model Fair Value

$3,418.84

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%
3.50%	$4,388.18	$4,201.51	$4,023.78	$3,854.51	$3,693.28
4.50%	$3,726.84	$4,201.51	$4,023.78	$3,854.51	$3,693.28
5.50%	$2,920.92	$3,128.38	$3,418.84	$3,854.51	$3,693.28
6.50%	$2,427.95	$2,539.12	$2,682.05	$2,872.63	$3,139.44
7.50%	$2,082.99	$2,149.89	$2,231.65	$2,333.85	$2,465.25

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

$2,825.49

1853.9% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.62

Base Case

$3,418.84

2264.3% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 0.49

Bull Case

$4,119.76

2749.0% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 0.42

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

Growth Assumptions (Select Years)

Year 1 Revenue Growth-0.22%

Year 3 Revenue Growth5.51%

Year 5 Revenue Growth0.99%

Year 7 Revenue Growth1.79%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin3.56%

Terminal EBIT Margin20.00%

Tax Rate19.86%

Historical Capex / Rev0.20%

NWC / Revenue1.17%

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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