Has Cardinal Health’s 72.6% Surge Left Further Upside in 2025?

• If you are wondering whether Cardinal Health is still attractive after its huge run, or if most of the upside is already priced in, you are not alone.
• The stock has climbed 72.6% over the past year and 320.3% over 5 years, although it has cooled slightly with a 3.8% dip over the last month and a 0.4% gain in the past week.
• Investors have been reacting to Cardinal Health sharpening its focus on core distribution and medical products, while also leaning into higher margin specialty and pharmaceutical solutions. At the same time, ongoing headlines around U.S. drug pricing reforms and supply chain resiliency are reshaping how the market values large healthcare distributors such as Cardinal.
• Despite the strong share price performance, our valuation checks give Cardinal Health a score of 2/6. This suggests the market may be closer to fairly valuing it than the rally implies, at least by traditional methods. Next, we will break down how different valuation approaches view the stock, and then wrap up with a more holistic way to think about its worth.

Cardinal Health scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Cardinal Health Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth by projecting the cash it can generate in the future and discounting those cash flows back to today in $ terms.

For Cardinal Health, the 2 Stage Free Cash Flow to Equity model starts with last twelve months free cash flow of about $4.46 billion. Analysts provide detailed forecasts for the next few years, and beyond that Simply Wall St extrapolates a slower growth path. Under this approach, free cash flow is projected to reach roughly $5.62 billion by 2035, with interim years stepping up gradually from the mid $2 billion range in 2026.

When all these projected cash flows are discounted back, the model arrives at an intrinsic value of about $461.54 per share. That implies the stock is trading at a 56.9% discount to its estimated fair value, suggesting the market is placing a much lower value on Cardinal Health than its long term cash generation might support.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Cardinal Health is undervalued by 56.9%. Track this in your watchlist or portfolio, or discover 918 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Cardinal Health.

Approach 2: Cardinal Health Price vs Earnings

For established, profitable companies like Cardinal Health, the Price to Earnings ratio is a useful way to gauge value because it links what investors pay today to the profits the business is already generating. In general, faster growth and lower perceived risk justify a higher PE multiple, while slower growth or higher risk usually warrant a lower one.

Cardinal Health currently trades on a PE of about 29.7x, above the broader Healthcare industry average of roughly 23.6x and slightly above its peer group average of around 27.1x. On the surface, that suggests investors are willing to pay a premium for its earnings compared with many other healthcare names.

Simply Wall St goes a step further with its Fair Ratio, an estimate of what a normal PE should be for Cardinal given its earnings growth outlook, margins, industry, market cap and specific risks. That Fair Ratio comes out at 29.1x, which is slightly below the current 29.7x. Because this gap is small, it indicates the market is broadly in line with what those fundamentals suggest Cardinal should trade at.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1455 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Cardinal Health Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to turn your view of Cardinal Health into a structured story that links what the business is doing, to a financial forecast, and then to a fair value estimate. On Simply Wall St’s Community page, millions of investors use Narratives to spell out their assumptions for future revenue, earnings, and margins, turning dry numbers into a clear thesis that can be compared directly with today’s share price to decide whether to buy, hold, or sell. Because Narratives update dynamically as new data, news, and earnings arrive, your fair value view can evolve in real time without rebuilding your model from scratch. For example, one Cardinal Health Narrative might lean bullish and project fair value near $217 based on sustained double digit EPS growth, while a more cautious Narrative could anchor closer to $150 if you think policy and margin risks will cap upside, and seeing both side by side helps you choose the story that best matches your own expectations.

Do you think there's more to the story for Cardinal Health? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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