A Fresh Look at Molina Healthcare’s Valuation Following Earnings Miss and Guidance Cut

Shares of Molina Healthcare (NYSE:MOH) just staged a 2.5% technical rebound after a difficult few weeks that had investors taking a second look at their positions. The catalyst was a sharp sell-off triggered by the company’s second-quarter 2025 earnings report, which showed adjusted earnings per share down 6.5% from last year and prompted a lower full-year earnings forecast. With medical cost pressures squeezing margins and even sparking a law firm investigation, the market reaction was swift and, for some, unsettling.

This rebound follows a prolonged downward stretch. Molina Healthcare’s stock is down nearly 48% over the past year, underperforming peers as Wall Street sentiment turned more cautious and several analysts issued downgrades. Most of the pressure stems from rising healthcare costs that have outpaced premium increases, with additional concern focused on Molina’s Florida operations into 2026. In the shorter term, momentum remains uncertain; recent volatility feels less like relief and more like a pause in the storm.

With the stock battered and investors debating its next move, the question is whether Molina Healthcare is now trading at a discount or if the current price already reflects the company’s future challenges.

Most Popular Narrative: 56.1% Undervalued

The latest narrative suggests Molina Healthcare is trading at a significant discount, with a fair value estimate far above current prices according to WallStreetWontons. This view is based on robust membership, contract growth, and expansion initiatives that could reshape the company's long-term trajectory, even as challenges mount.

Membership Growth: MOH has seen a 9% increase in members year over year, reaching approximately 5.7 million members as of March 31, 2024. This growth is driven by new contract wins, acquisitions, and expansion.

What is powering such a bullish view? The narrative teases ambitious growth assumptions that go beyond the recent headlines. For example, revenue acceleration and margin optimism are at the core of this valuation story. Is there a hidden advantage few are seeing in the crowd?

Result: Fair Value of $411.65 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent regulatory shifts and unanticipated spikes in medical costs remain critical risks that could challenge the bullish outlook for Molina Healthcare.

Find out about the key risks to this Molina Healthcare narrative.

Another View: Discounted Cash Flow Analysis

Looking at Molina Healthcare from the perspective of our DCF model, a different story emerges. This method also sees the company as trading well below its estimated value, supporting the case that shares are potentially undervalued. However, does the DCF truly capture all the current risks, or could there be even more uncertainty ahead?

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 Molina Healthcare 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 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 Molina Healthcare Narrative

If you see the story differently or want a hands-on approach, you can build your own narrative using the same data in just a few minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Molina Healthcare.

Looking for more investment ideas?

Don’t let great investment opportunities pass you by by focusing on just one stock. Enhance your strategy and position yourself for what’s next with these curated stock picks from Simply Wall Street. You might gain an advantage by exploring sectors that other investors often overlook.

• Boost your portfolio’s income potential when you put your capital to work with dividend stocks with yields > 3%, which consistently offer yields above 3%.
• Increase your exposure to tomorrow’s breakthroughs by exploring AI penny stocks that are driving innovation in artificial intelligence.
• Find out which businesses might be trading for less than they’re worth and consider possible bargains with undervalued stocks based on cash flows, which are tailored to strong fundamentals.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com