For investors wondering whether Hims & Hers Health still offers good value after its rise as a telehealth brand, or if the easier gains are already behind it, this article walks through what the current price could be implying about the business.
The stock last closed at US$31.69, with a 7 day return of an 8.7% decline, a 30 day return of a 14.8% decline, a year to date return of a 5.1% decline, a 1 year return of 22.4%, and a 3 year return that is a very large multiple of its earlier level, alongside a 5 year return of 75.7%.
Recent coverage around Hims & Hers Health has focused on its role in online healthcare and consumer telehealth services, which has kept investor attention on how scalable its model might be. This context helps explain why the share price has moved around as the market reacts to changing expectations for the business.
Our valuation framework currently gives Hims & Hers Health a value score of 2 out of 6. This means it screens as undervalued on 2 of 6 checks. Next, we will walk through the main valuation approaches that lead to that score, followed by a more complete way to think about what the stock could be worth over time.
Hims & Hers Health scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow model takes estimates of the cash a company could generate in the future and discounts those amounts back to what they might be worth in today’s dollars. It is essentially asking what a stream of future cash flows is worth right now.
For Hims & Hers Health, the model used is a 2 stage Free Cash Flow to Equity approach, based on cash flows in US$. The latest twelve month free cash flow is US$189.4 million. Analyst inputs and subsequent extrapolations suggest free cash flow could reach US$502.5 million by 2030, with intermediate years in between, such as US$191.3 million in 2026 and US$406.7 million in 2029, feeding into the calculation.
When those projected cash flows are discounted back to today and aggregated, the model arrives at an estimated intrinsic value of US$63.39 per share. Compared with the recent share price of US$31.69, this DCF output implies the stock screens as around 50.0% undervalued under these assumptions.
For companies that are generating earnings, the P/E ratio is a common way to see how much investors are paying for each dollar of profit. It effectively wraps the market’s expectations about future growth and risk into a single number that is easy to compare.
Higher growth expectations and lower perceived risk usually go together with a higher P/E, while slower growth or higher uncertainty tend to be associated with a lower P/E. The question is therefore not whether a P/E is “high” in isolation, but whether it looks high or low relative to what the business might justify.
Hims & Hers Health currently trades on a P/E of 53.92x. That sits above the Healthcare industry average of 22.93x and also above the peer group average of 31.77x. Simply Wall St’s proprietary Fair Ratio for the company is 27.36x. This Fair Ratio is designed to be more tailored than a simple peer or industry comparison, because it considers factors such as earnings growth, profit margins, industry, market cap and specific risk characteristics.
Comparing the current P/E of 53.92x with the Fair Ratio of 27.36x suggests the shares are pricing in more optimism than this framework supports.
Earlier we mentioned that there is an even better way to think about valuation. This is where Narratives come in as your way of attaching a clear story to the numbers by linking your view of Hims & Hers Health to a forecast for revenue, earnings and margins. This then flows through to a Fair Value that you can compare with today’s price on the Simply Wall St Community page, where Narratives are updated automatically when new news or earnings arrive. Narratives can differ widely. For example, one Hims & Hers Health Narrative assumes a fair value of US$114 per share with revenue compounding near 29% and profit margins at 15%. Another assumes a fair value of US$44.36 with revenue growth around 17.16% and profit margins near 8.01%. Narratives give you a clear, side by side view of how different beliefs translate into different values and help you decide if the current price looks above or below the range of stories you find most reasonable.
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.
