Is It Too Late To Consider Cencora After Its Strong 2025 Share Price Rally?

• If you are wondering whether Cencora is still worth buying after such a strong run, or if the prudent move now is to wait for a better entry price, you are in the right place.
• The stock has pulled back around 6.5% over the last month, but is still up 51.6% year to date and about 48.1% over the past year, which keeps the long term uptrend very much intact.
• Recent headlines have focused on Cencora's ongoing role in streamlining pharmaceutical distribution and expanding its specialty services footprint. This reinforces the narrative that it sits at the heart of a critical healthcare supply chain. At the same time, investors are increasingly framing it as a defensive compounder in a choppy market, which helps explain why dips have been relatively short lived.
• On our numbers, Cencora currently scores just 2 out of 6 on valuation checks, suggesting the market might already be pricing in a lot of good news. In the sections ahead we will walk through different valuation lenses, then finish with a more holistic way to think about what the stock is really worth.

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

A Discounted Cash Flow, or DCF, 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 dollar terms.

For Cencora, the latest twelve month free cash flow is about $3.3 billion. Analysts provide detailed forecasts for the next few years, and these are then extended by Simply Wall St using a 2 Stage Free Cash Flow to Equity model. Under these assumptions, Cencora’s free cash flow is projected to rise to around $8.9 billion by 2035, reflecting healthy but gradually slowing growth as the business matures.

When those future cash flows are discounted back to today, the model arrives at an estimated intrinsic value of about $862.49 per share. That implies the stock is trading at roughly a 60.5% discount to its calculated fair value, suggesting the market is being quite conservative about Cencora’s long term cash generation.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Cencora is undervalued by 60.5%. Track this in your watchlist or portfolio, or discover 903 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 Cencora.

Approach 2: Cencora Price vs Earnings

For profitable companies like Cencora, the price to earnings (PE) ratio is a useful yardstick because it links what investors are paying directly to the profits the business is generating today. In general, faster growing and lower risk companies tend to have higher PE ratios, while slower growing or riskier businesses often trade on lower multiples.

Cencora currently trades on a PE of around 42.5x, which is well above both the broader Healthcare industry average of about 23.3x and the peer group average of roughly 22.2x. On the surface, that indicates investors are already paying a premium for its quality and growth profile.

Simply Wall St also calculates a proprietary Fair Ratio of 33.7x for Cencora. This represents the PE multiple that might reasonably be expected given its earnings growth outlook, margins, industry positioning, market cap and risk profile. This approach is more tailored than a simple comparison to peers or the sector because it adjusts for company specific fundamentals rather than assuming all Healthcare companies deserve the same multiple. With the current PE (42.5x) sitting meaningfully above this Fair Ratio (33.7x), the stock appears expensive on an earnings basis.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1447 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Cencora Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply the stories investors tell about a company, linking their view of its future revenue, earnings and margins to a specific fair value estimate.

On Simply Wall St, Narratives live in the Community page and give you an easy way to connect the qualitative story, such as Cencora’s digital investments, specialty drug demand, regulatory risks and margin pressures, to a quantitative forecast that rolls up into a fair value per share.

Because each Narrative explicitly ties a company’s story to assumptions and then to a fair value, you can quickly compare that fair value to today’s share price to decide whether Cencora looks like a buy, hold or sell under that particular perspective.

Narratives are also dynamic, updating automatically when new information like earnings, facility expansions or margin guidance comes in. You can see how different investors land at very different conclusions on Cencora. For example, one Narrative might put fair value around $274 per share while another sits closer to $355 per share, based on differing expectations for growth, profitability and risk.

Do you think there's more to the story for Cencora? 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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