Evaluating Teladoc Health After Its Recent 10% Rally and Updated Cash Flow Forecasts

If you are weighing what to do next with Teladoc Health stock, you are definitely not alone. It's one of those names that reliably stirs up heated debates, as few companies have seen the kind of wild ride that Teladoc has experienced in recent years. Just in the last week, the shares rose 4.5%, building on a nearly 10% climb over the past month. These short bursts of optimism stand in stark contrast to the longer-term pain, with the stock still down around 66% over three years and a jaw-dropping 96% over the last five. For many investors, moves like these prompt a familiar question: does Teladoc have more risk, or is there real value beneath the surface?

Some of these swings have tracked with shifts in the digital health industry and the ongoing evolution of telemedicine after its pandemic boom. As the broader market begins to reassess growth stocks and recalibrate risks, Teladoc has found itself at the center of changing investor perceptions. According to our recent analysis, Teladoc receives a valuation score of 5 out of 6, which suggests it appears undervalued on almost every key metric we use.

Curious what those valuation methods are and how they stack up? Next, we will break down each approach and show you where Teladoc shines, and provide an even smarter perspective for sizing up stocks in today’s market.

Why Teladoc Health is lagging behind its peers

Approach 1: Teladoc Health Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model projects a company’s future cash flows and then discounts them back to today’s dollars to estimate what the business is intrinsically worth. For Teladoc Health, this approach begins with its most recent Free Cash Flow of $148.3 million. Analysts forecast growing cash generation in the years ahead, with FCF projected to reach roughly $207.7 million by 2029. Estimates provided by analysts cover up to five years, after which Simply Wall St extrapolates further growth for the 10-year outlook.

All projected cash flows are measured in US dollars. By discounting each year's estimated free cash flow, Teladoc’s fair value per share is calculated to be $15.77. With the stock currently trading at a 45.7% discount to this intrinsic value, the DCF analysis indicates that Teladoc Health shares are significantly undervalued on a long-term cash flow basis.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Teladoc Health is undervalued by 45.7%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Teladoc Health Price vs Sales (P/S)

The Price-to-Sales (P/S) ratio is a particularly useful valuation metric for companies like Teladoc Health, as it focuses on revenue generation rather than profitability. This makes it ideal for firms that are growing rapidly or are not yet consistently profitable, since it sidesteps the distortions that losses or unusual expenses can introduce into earnings-based multiples.

In general, a "normal" or "fair" P/S ratio will reflect the growth expectations, profit margins, and risk profile of a company in relation to its peers. Fast-growing businesses or those with higher margin potential can command premium P/S multiples, while higher-risk or low-growth firms see much lower ones.

Currently, Teladoc Health trades at a P/S ratio of 0.60x, which is dramatically below both the Healthcare Services industry average of 3.13x and the peer group average of 4.26x. At first glance, this deep discount might suggest Teladoc is overlooked or undervalued by the market. However, the best assessment comes from the proprietary Fair Ratio developed by Simply Wall St. For Teladoc, this stands at 2.11x. This Fair Ratio uniquely considers Teladoc's revenue growth outlook, margins, risk factors, its industry classification, and even its market capitalization, making it a more tailored and insightful benchmark than simple industry or peer comparisons.

Comparing the Fair Ratio (2.11x) with Teladoc’s current P/S (0.60x) shows the stock is priced well below what would be expected given its fundamentals. This provides a strong case that the market is undervaluing Teladoc relative to its revenue profile and long-term growth potential.

Result: UNDERVALUED

PS 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 Teladoc Health Narrative

Earlier, we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is your chance to connect the numbers to the real story behind a company, incorporating your own perspective on what is really driving Teladoc Health’s future, including your outlook on revenue growth, margins, or market shifts. By combining your view of Teladoc’s opportunities or challenges with a financial forecast, a Narrative links the company’s story directly to an updated fair value. This gives your investment decision essential context beyond raw data.

With Simply Wall St’s easy-to-use Narratives feature available for every stock in the Community page, millions of investors are already using these tools to compare their fair value with the current price. This helps them decide whether to buy, hold, or sell. Narratives are dynamic and automatically adapt as new information or insights, such as major news or quarterly earnings, emerge in real time.

For example, one investor may see Teladoc Health as primed for strong global expansion and set a fair value of $12, while another may worry about stiff competition and assign just $7. This demonstrates how your unique Narrative shapes your own estimate and investing actions.

Do you think there's more to the story for Teladoc Health? 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.

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