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$ELV (+1,1%)

Valuation and Key Metrics

Elevance Health appears to be fairly valued, with key metrics highlighting both strengths and concerns:


P/E Ratio:

15.23, indicating a fair valuation compared to industry peers. Forward P/E of 12 suggests potential earnings growth.


PEG Ratio:

1.14, suggesting the stock is reasonably priced when factoring in growth expectations.


Free Cash Flow Yield:

Relatively low, indicating the need for improvement in cash flow generation.


Competitive Advantage (Moat)

Elevance Health has a significant economic moat, supported by an extensive provider network, brand strength, and

scale. Its broad healthcare services ensure a steady revenue stream. Risks include competition from industry giants and

regulatory changes.

Operational Efficiency

ROIC:

8.54%, which just barely exceeds the WACC of 8.5%. While positive, this does raise questions about capital efficiency.


CapEx to Cash Flow Ratio:

Low, indicating efficient capital allocation and the ability to generate returns without heavy CapEx reliance.


Financial Health and Risks


Debt-to-Equity Ratio:

0.62, reflecting moderate leverage. Debt-to-EBITDA of 2.51 indicates manageable but notable debt levels. Interest

coverage of 8.52 is strong.


Growth Potential


Dividend Yield:

1.54%, with a strong 3-year CAGR of 15.9%. The Chowder Number of 17.44 suggests robust growth prospects for

dividend investors.


DCF Valuation and Intrinsic Value

Using a WACC of 8.5% and a terminal growth rate of 2.5%, the intrinsic value is estimated at $457 per share. A margin

of safety yields a conservative buy range of $365 to $410, offering potential upside.


Conclusion

Elevance Health is a well-managed company with a solid economic moat and efficient operations. Its valuation metrics

and strong dividend growth make it attractive for long-term investors. However, potential regulatory risks and modest

returns on capital should be monitored.


The stock is a "Buy" within the safe entry range of $365 to $410.

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