CorVel (CRVL): Evaluating the Valuation Following Strong Growth, AI Adoption, and Strategic Acquisitions

CorVel (CRVL) just reported quarterly results showing clear growth in both revenue and net income, much of which management credits to its ongoing investment in Agentic AI and targeted acquisitions. Investors are watching these efforts closely as the company focuses on technology-driven efficiency and workforce development.

See our latest analysis for CorVel.

CorVel’s steady adoption of AI and targeted acquisitions has kept it in the headlines, but this momentum has not fully translated into its recent share price return, which has slipped nearly 31% year-to-date. Despite a strong long-term total shareholder return of 153% over five years and positive signals in the latest earnings, current sentiment appears cautious in light of recent volatility.

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With share prices down sharply this year despite robust financial results and ongoing AI investment, the key question is whether CorVel is undervalued at current levels or if the market has already taken its growth potential into account.

Price-to-Earnings of 36.7x: Is it justified?

CorVel is currently trading at a price-to-earnings (P/E) ratio of 36.7x, placing it well above both its industry and peer averages. Given the last close price of $75.36, the stock appears richly valued through the lens of earnings multiples.

The price-to-earnings multiple helps investors gauge how much they are paying for each dollar of company earnings. For a tech-enabled healthcare operator like CorVel, a high P/E can sometimes be justified by rapid growth or exceptional profitability. However, it can also signal overly optimistic expectations.

When comparing CorVel’s P/E of 36.7x to the US Healthcare industry average of 21.5x and the peer average of 22.6x, it is clear the market has set a much steeper price for its shares. This premium suggests that investors expect CorVel’s earnings to grow faster than its competitors or that they see unique value in its business model, even amid recent share price volatility.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 36.7x (OVERVALUED)

However, ongoing share price declines and uncertain market sentiment could challenge CorVel’s valuation, particularly if growth or profitability does not accelerate.

Find out about the key risks to this CorVel narrative.

Another View: What Does the SWS DCF Model Say?

While traditional valuation using earnings suggests CorVel’s shares look expensive, our DCF model provides a different perspective. According to this discounted cash flow analysis, CorVel’s fair value is estimated at $60.34. This estimate makes the current share price of $75.36 appear overvalued by about 25%. Which method will the market trust as the dust settles?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out CorVel for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 860 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own CorVel Narrative

If you'd rather reach your own conclusions or want to see how the numbers stack up for yourself, you can create your own take on CorVel in just a few minutes. Do it your way

A great starting point for your CorVel research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

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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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