Does Cencora’s Stock Surge in 2025 Reflect Its True Value After Recent Supply Chain Moves?

If you’re following the healthcare sector, you’ve probably noticed Cencora’s impressive performance on the stock market lately. You might be wondering if it’s time to get in, cash out, or just hold steady. After all, Cencora is up a robust 48.0% since the start of the year, and it has soared an eye-opening 266.9% over the past five years. In just the last 30 days, the stock has climbed another 7.9%, riding on the heels of industry optimism around pending U.S. drug policy changes and Cencora’s successful expansion into specialty distribution. These factors have both boosted investor sentiment and hints of growth potential.

But is the market’s enthusiasm fully justified, or is the rally running a little too far on excitement? That is the big question for smart investors, especially with recent headlines pointing to Cencora’s strategic acquisitions and partnerships strengthening its supply chain footprint. Taken together, the news is building a sense that Cencora’s risk profile is shifting, positively in the eyes of growth investors, but with some warning lights flashing for those attuned to value.

So let’s talk numbers: based on our six key checks for undervaluation, Cencora scores just 2 out of 6. That means it passes a couple of our value screens, but not most of them. Still, the real insights come from looking at the details behind those checks. As we’ll explore, there is an even sharper way to assess Cencora’s true worth that goes beyond the traditional yardsticks. Let’s dig into how the most-used valuation approaches stack up for Cencora first.

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

Approach 1: Cencora Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) approach estimates a company’s value by projecting its future cash flows and then discounting them back to present-day dollars. This model provides a data-driven look at whether a stock is priced appropriately, rooted in core business performance rather than hype.

For Cencora, the latest reported Free Cash Flow (FCF) stands at $1.17 billion. Analyst projections see FCF rising steadily, reaching a projected $4.59 billion by 2029. Importantly, only the first five years reflect direct analyst estimates, while projections beyond that are carefully extrapolated. This expected growth in FCF is a key reason the DCF model lands on a robust estimate for the company’s intrinsic worth.

According to the DCF analysis, Cencora’s fair value comes out at $679.26 per share. With the current share price trading at a 51.0% discount to this estimated fair value, the model signals that the stock is significantly undervalued relative to its projected cash flow generation.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Cencora is undervalued by 51.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Cencora Price vs Earnings (PE Ratio)

The Price-to-Earnings (PE) ratio is a widely used valuation metric for profitable companies because it gives investors a simple way to assess how much they are paying for each dollar of earnings. For companies like Cencora, with steady and growing profits, the PE ratio provides a useful snapshot of market expectations versus actual performance.

It is important to note that a company’s growth prospects and perceived risks play a big role in what PE ratio is considered "normal." Higher growth usually justifies paying a higher multiple, while more risk tends to suppress it. The industry average PE for healthcare stands at 21.6x, while peer companies trade at around 23.0x.

Currently, Cencora’s PE ratio is 34.0x, considerably higher than both the industry and peer averages. However, Simply Wall St’s proprietary "Fair Ratio" adjusts for key factors like Cencora’s earnings growth rate, industry trends, profit margins, market capitalisation, and specific company risks. The result is a Fair Ratio of 28.0x for Cencora. This makes the Fair Ratio a more holistic benchmark than simply comparing with peers, since it takes into account the elements that most impact long-term value.

With Cencora trading at 34.0x against a Fair Ratio of 28.0x, the stock appears overvalued by this measure.

Result: OVERVALUED

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

Upgrade Your Decision Making: Choose your Cencora Narrative

Earlier we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative brings your view of a company’s future together with its actual numbers, letting you spell out your story: why you think Cencora’s margins or revenue will rise, what risks matter most, and what you expect its fair value to be.

With Narratives, you connect the dots between business drivers, your assumptions for future cash flow or earnings, and a resulting fair value. This approach allows you to see not only what the company is worth on paper, but also the reasoning that underpins your investment decision.

This makes Narratives more than just financial models. They turn the process into an accessible, flexible tool, allowing you to build and update your view easily. On Simply Wall St’s Community page, investors use Narratives every day to benchmark whether a stock’s price is above or below their own fair value and decide whether to buy, hold, or sell, all with data refreshed as news or earnings arrive.

For example, while one Cencora investor may craft a Narrative based on analyst forecasts and set a bullish price target of $355.00, another may see risks and project a more cautious $274.00. This gives you the power and clarity to choose the story, numbers, and valuation that best fits your investing outlook.

Do you think there's more to the story for Cencora? Create your own Narrative to let the Community know!

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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