CENCORA, INC. (COR): what the price requires
At today's price, CENCORA, INC. (COR) is priced for -1.4% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/COR
Headline
| Field | Value |
|---|---|
| Ticker | COR |
| Company | CENCORA, INC. |
| Current price | $305.58/sh |
| Composition | Human Health 89% / Animal Health 2% / Alliance Healthcare 8% / Other Healthcare Solutions 2% / Intersegment eliminations 0% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 0.2% |
| Operating margin today | 1.2% |
| Margin compression implied | -1.0pp |
| Implied growth | -1.4% |
| Multiple paid | 19x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.6pp.
Reconcile: at the x-ray's 9.3% required return this reads ~14.5%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.07σ |
| cohort percentile (of 112 peers) | 38 |
| implied end-window share | 1% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.09x | 4 | expensive |
| Earnings | 6.54x | 4 | expensive |
| Relative | 1.56x | 3 | expensive |
| Growth | 1.32x | 3 | expensive |
Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.3%); the inversion above states its own rate.
Per-Model Detail (n=14)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $145.68 | 2.10x | yes | FCF base $1.6B, growth 6% (input: historical growth), terminal g 4.0%, WACC 8.3%, 5yr projection |
| DCF Exit Multiple | Growth | $268.93 | 1.14x | yes | Exit EV/EBITDA: 19.3x / 21.3x / 23.3x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $196.44 | 1.56x | yes | P/E 24.92x (blended: static sector reference 18x + trailing (TTM) 41x), scenarios: 20.9x / 24.9x / 28.9x (bear / base = reference held flat / bull), EV/EBITDA 14.78x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $80.46 | 3.80x | yes | BV/sh $17.39, ROE (TTM) 42.8%, ke 9.3% |
| Two-Stage Excess Return | Asset | $197.14 | 1.55x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $231.30 | 1.32x | yes | Rev $328.7B, growth 6% (input: historical growth; tapered), Terminal P/S: 0.2x / 0.2x / 0.2x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $81.71 | 3.74x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $2.88B × (1−22%) / WACC 8.3% → EPV (no growth) |
| Residual Income | Asset | $128.31 | 2.38x | yes | BV $17.39 + 5yr PV of (ROE (TTM) 42.8% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $53.98 | 5.66x | yes | √(22.5 × EPS $7.45 × BVPS $17.39) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $149.32 | 2.05x | yes | EBITDA $3.30B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $32.92 | 9.28x | yes | FCF $1558.1M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $25.00 | 12.22x | yes | SBC-adj FCF $1.41B (FCF $1.56B − SBC $0.14B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $6.24 | 48.97x | yes | EPS $7.45 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | $13.49 | 22.65x | yes | BV $17.39 × (ROIC 6.5% / WACC 8.3%) (excluded from median) |
| P/Sales Sector | Relative | $4205.59 | 0.07x | yes | Revenue $328.68B × sector P/S 2.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $80.52 | 3.80x | yes | EPS $7.45 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $10.4b |
| Net debt / NOPAT (after-tax) | 3.51x |
| Net debt / operating income (pre-tax) | 2.73x |
| Share count CAGR (buyback) | -2.0% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Cencora is a pharmaceutical distribution giant, the renamed AmerisourceBergen, with Human Health (US drug distribution) making up about 89% of its value and the OneOncology specialty business now a growth engine. This is a mature, razor-thin-margin, high-volume business where scale is the moat.
- At $271.90 no valuation family reaches the price. It is rich on assets, earnings power, peers, and even forward growth, so the price is a bet beyond what any standard frame supports. Inverting it implies roughly negative 4% operating growth for five years, which is below the company's own trajectory but the multiple is the issue, not the implied rate.
- The tension is between a strong recent guidance raise and a quarter where revenue missed badly on branded-drug price cuts and a mail-order customer. Distribution economics are razor-thin: a 0.8% operating margin means small swings in mix matter.
Bull Case
Start with the stage, because it changes how you should read the numbers. Cencora is a mature, scale-driven distributor, not a growth stock, and its economics look alarming until you understand the model. Operating margin runs near 0.8% and reported revenue is enormous, around $329B, so the price-to-sales lens is meaningless and the thin margin is a feature, not a flaw. Drug distribution is a penny-on-the-dollar business where three players, Cencora, McKesson, and Cardinal, move the vast majority of pharmaceuticals in the United States. The moat is volume and logistics, not pricing power, and at this scale that moat is nearly unassailable.
The trajectory is healthier than the headline suggests. Cencora raised fiscal 2026 EPS guidance to $17.70 to $17.90, lifted after the OneOncology acquisition boosted earnings and after opportunistic share repurchases. The specialty and oncology businesses are the growth layer on top of the steady base distribution: higher-margin, faster-growing services where Cencora distributes specialty drugs and operates specialty pharmacies. The FY2025 10-K shows how concentrated yet sticky the customer base is, noting that one customer "accounted for approximately 38% of our accounts receivable, net" and that "Evernorth Health Services accounted for approximately 13% of our revenue" (accession 0001140859-25-000131). Those are deep, multi-year contracts that competitors cannot easily dislodge.
The balance-sheet and capital-return story supports a buyer. Cencora generates substantial free cash flow, has been shrinking its share count steadily, and plans roughly $1 billion in buybacks. Returns on equity are very high, near 43% trailing, because the asset-light distribution model turns capital over rapidly. The bull case is not that this business grows fast. It is that a near-irreplaceable logistics franchise with a growing specialty layer and aggressive buybacks compounds per-share value reliably, and that the recent revenue miss reflects mix and pricing noise rather than a break in the model.
Bear Case
The bear case opens with the variable that has the most leverage on a distributor: the customers and the drug-pricing environment, neither of which Cencora controls. In its fiscal second quarter ended March 31, 2026, revenue rose only 3.8% to $78.4B and badly missed estimates, and management cut its revenue growth outlook citing branded-drug price cuts, lower sales to a large mail-order client, and prior customer losses in the US segment. That is the bear thesis in one quarter: a razor-thin-margin business with enormous customer concentration is exposed to exactly these external pressures, and the price does not reflect that fragility.
The customer concentration is the structural risk. The FY2025 10-K discloses that a single relationship accounted for about 38% of net accounts receivable and that Evernorth was roughly 13% of revenue (accession 0001140859-25-000131). When one customer is that large, contract renegotiations and losses move the whole company, and the recent mail-order softness shows how quickly that translates into a guidance cut. Layer on government and political pressure to lower drug prices, most-favored-nation pricing proposals, and the long shadow of opioid-litigation settlements, and the regulatory and policy exposure is the dominant macro variable, not GDP or rates.
The valuation makes the disconnect concrete. At $271.90 (June 27, 2026) no valuation family reaches the price. The relative-multiple lens lands near $186, the asset-based simple-excess-return near $80, Earnings Power Value near $80, and even the forward DCF perpetual-growth method lands below the price near $150. The blended X-ray sits near $186, roughly a third below the quote. Inverting the price implies the market is paying about 17x company-wide operating income for a business whose own implied trajectory is mildly negative, which means the premium rests entirely on the buyback math and the specialty-growth story continuing without interruption. For a 0.8%-margin distributor that just missed and cut, that is a thin cushion against any further customer or pricing shock.
Valuation
At $271.90, inverting the price puts Cencora at roughly 17x company-wide operating income, which solves to about negative 4% annual operating growth over a five-year stage at a 7% cost of capital. The implied rate is mild, but the level of the multiple against a 0.8% operating margin is the real story: the market is capitalizing a thin-margin distributor at a premium that depends on per-share compounding through buybacks and specialty growth rather than on the implied operating rate.
The model families are unusually unanimous in reading the price as full. None reaches it. The forward-growth DCF perpetual-growth lands near $150, the exit-multiple DCF near $244 (the lone method close to the price), the relative-multiple lens near $186, the asset lens with simple excess return near $80 and residual income near $128, and the earnings-power EPV near $80. The price-to-sales lens is not meaningful for a distributor of this scale. The blended X-ray sits near $186, well below the $271.90 quote.
The valuation conclusion is that the price is a bet beyond what standard frames support, justified, if at all, by the durability of the franchise and the per-share effect of continued buybacks. The high trailing ROE near 43% is real and reflects the asset-light model, but it is already in the price. The deciding variable is whether the specialty and oncology growth offsets the branded-drug pricing and customer-concentration drag well enough to keep earnings compounding. The recent revenue miss is the warning that this is not automatic.
Catalysts
The raised fiscal 2026 EPS guidance of $17.70 to $17.90 is the near-term anchor, lifted on OneOncology contribution and opportunistic buybacks. The next earnings reports test whether the company holds that EPS frame even after cutting its revenue growth outlook, which makes the gap between top-line softness and bottom-line guidance the key thing to watch.
The revenue miss is the catalyst that already moved the stock and sets the bar. Fiscal Q2 2026 revenue of $78.4B missed estimates, with management citing branded-drug price cuts, a large mail-order client, and prior customer losses. Watch for stabilization or further deterioration in the US Healthcare Solutions segment, and for any news on the large customer relationships disclosed in the filing.
The specialty and oncology layer is the growth catalyst. OneOncology integration and specialty-distribution momentum are what justify the premium, so segment growth disclosures and any further specialty acquisitions are the signals to track. The roughly $1 billion buyback program drives the per-share math. On the policy side, drug-pricing legislation, most-favored-nation proposals, and any opioid-settlement developments are the macro variables with the most leverage on the thesis.
Sources: Cencora FY2026 guidance update (Ticker Report), Cencora lifts 2026 outlook on OneOncology (TipRanks), Cencora overview (StockAnalysis)
Peer Cohorts (Per Segment, With Filing Citations)
U.S. Healthcare Solutions / International Healthcare Solutions (reported)
- CAH (Cardinal Health, Inc.)
- (no filing in the citation store)
- MCK (McKESSON CORPORATION)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.