The UnitedHealth Group Inc (UNH) DCF Valuation: Is The Stock Undervalued?

Johnny HopkinsStock Screener5 Comments

As part of a new series, each week we typically conduct a DCF on one of the companies in our screens. This week we thought we’d take a look at one of the stocks that are not currently in our screens, UnitedHealth Group Inc (UNH).


UnitedHealth Group is one of the largest private health insurers, providing medical benefits to about 53 million members globally, including 5 million outside the U.S. as of mid-2023. As a leader in employer-sponsored, self-directed, and government-backed insurance plans, UnitedHealth has obtained massive scale in managed care. Along with its insurance assets, UnitedHealth’s continued investments in its Optum franchises have created a healthcare services colossus that spans everything from medical and pharmaceutical benefits to providing outpatient care and analytics to both affiliated and third-party customers.

Recent Performance

Over the past twelve months the share price is up 11.02%.

UNH Chart

UNH/a> data by YCharts


  • Discount Rate: 6%
  • Terminal Growth Rate: 2%
  • WACC: 6%

Forecasted Free Cash Flows (FCFs)

Year FCF (billions) PV(billions)
2024 24.6 23.21
2025 27 24.03
2026 29.6 24.85
2027 32.4 25.66
2028 35.4 26.45

Terminal Value

Terminal Value = FCF * (1 + g) / (r – g) = 902.70 billion

Present Value of Terminal Value

PV of Terminal Value = Terminal Value / (1 + WACC)^5 = 674.55 billion

Present Value of Free Cash Flows

Present Value of FCFs = ∑ (FCF / (1 + r)^n) = 124.21 billion

Enterprise Value

Enterprise Value = Present Value of FCFs + Present Value of Terminal Value = 798.76 billion

Net Debt

Net Debt = Total Debt – Total Cash = 34.26 billion

Equity Value

Equity Value = Enterprise Value – Net Debt = 764.50 billion

Per-Share DCF Value

Per-Share DCF Value = Enterprise Value / Number of Shares Outstanding = $826.48


DCF Value Current Price Margin of Safety
$826.48 $539.54 34.72%

Based on the DCF valuation, the stock is undervalued. The DCF value of $826.48 per share is higher than the current market price of  $539.54. The Margin of Safety is 34.72%.

It is important to note that this valuation is based on a number of assumptions, and these assumptions could change in the future. This valuation is meant to be a back-of-the-envelope analyse that could be used as a starting point in a much more thorough valuation process. As a result, it is important to do your own research before making any investment decision.

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5 Comments on “The UnitedHealth Group Inc (UNH) DCF Valuation: Is The Stock Undervalued?”

        1. On the balance sheet for the company, I see Net Debt on the line item.

          Do you know where they got the total debt and total cash from the balance sheet to put into the equation?
          Net Debt = Total Debt – Total Cash = 34.26 billion

          1. UNH Latest Annual Report shows – ST Debt of $3.11B and LT Debt of $54.51B = $57.62B. Cash and cash equivalents $23.36B.

            Net Debt = $57.62 – $23.36B = $34.26B.

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