• This article is intended to help you assess whether Hims & Hers Health at around US$16.45 still offers value or whether most of the opportunity is already reflected in the share price.
• The stock has returned 4.0% over the last 7 days, compared with a 30 day return of a 37.8% decline, a year to date return of a 50.8% decline and a 1 year return of a 59.8% decline, while the 3 year and 5 year returns stand at 66.5% and 24.4% respectively.
• These mixed returns have kept Hims & Hers Health on the radar for investors who are trying to reconcile earlier gains with more recent weakness. With no major new announcements highlighted here, the current price reflects how the market is digesting the company’s broader story and expectations.
• On our valuation checklist, Hims & Hers Health scores 3 out of 6 checks as looking undervalued, giving it a valuation score of 3. Next, we look at how traditional methods like DCF and multiples line up with that score and then finish with a more holistic way to think about value.

Approach 1: Hims & Hers Health Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes estimates of the cash a company may generate in the future and discounts those amounts back to today, to arrive at an estimate of what the business could be worth now.

For Hims & Hers Health, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $139.12 million. Analysts provide explicit forecasts for several years, and then Simply Wall St extends these with its own assumptions. In this case, the projections run out to 2035, with free cash flow in 2030 estimated at $485.70 million before discounting.

When all projected cash flows are discounted back and divided by the number of shares, the model points to an estimated intrinsic value of about $64.81 per share. Compared with the current share price of around $16.45, this implies the stock is about 74.6% undervalued according to this specific DCF setup.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Hims & Hers Health is undervalued by 74.6%. Track this in your watchlist or portfolio, or discover 47 more high quality undervalued stocks.

Approach 2: Hims & Hers Health Price vs Earnings

For profitable companies, the P/E ratio is a useful way to think about value because it links what you pay directly to the earnings the business is already generating. A higher or lower P/E often reflects what the market expects for future growth and how much risk investors feel they are taking on.

In general, stronger growth and lower perceived risk can justify a higher P/E, while slower growth or higher uncertainty usually point to a lower, more cautious P/E being reasonable. That is why looking at Hims & Hers Health’s current P/E of 29.21x in isolation does not tell the full story.

Compared with an industry average P/E of 23.17x in Healthcare and a peer average of 76.47x, Hims & Hers Health sits above its sector but well below many peers. Simply Wall St’s Fair Ratio for the company is 19.64x, which is its own view of what a more appropriate P/E might be, based on factors like earnings growth, profit margins, industry, market cap and specific risks.

Because this Fair Ratio incorporates company specific drivers, it can be a more tailored benchmark than simple industry or peer comparisons. With the current P/E of 29.21x above the Fair Ratio of 19.64x, the shares appear expensive on this measure.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Hims & Hers Health Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce Narratives, which sit inside the Simply Wall St Community and let you attach a clear story about Hims & Hers Health to your own assumptions about fair value, future revenue, earnings and margins. This way, the company’s story flows into a forecast and then into a single fair value you can compare with today’s price to decide whether it looks more like a buy, hold or sell for you. Each Narrative updates as new news or earnings arrive, and very different views on the same stock can coexist side by side. For example, one Hims & Hers Health Narrative might assume a fair value of about US$13.00, while another might assume about US$173.02. This shows how the same public data can support very different but clearly explained investment cases.

For Hims & Hers Health, we will make it really easy for you with previews of two leading Hims & Hers Health Narratives:

Fair value: US$86.09 per share

Implied discount to this fair value: about 81% vs the recent price of US$16.45, based on ((86.09 minus 16.45) divided by 86.09)

Revenue growth assumption used in this narrative: 22%

• Sees Hims & Hers Health as a broad healthcare platform tying together diagnostics, treatment and prevention, with a focus on personalised plans and subscription relationships.
• Highlights free cash flow generation, no debt, higher margins and rising average revenue per user as key supports for the business model.
• Views regulatory and legal issues as meaningful but manageable risks within a much larger long term opportunity in a large healthcare market.

Fair value: US$13.00 per share

Implied premium to this fair value: about 26% vs the recent price of US$16.45, based on ((16.45 minus 13.00) divided by 13.00)

Revenue growth assumption used in this narrative: 13.01%

• Focuses on legal and regulatory pressures, particularly around telehealth prescribing, data privacy and drug pricing, as headwinds for growth and margins.
• Flags rising competition, higher customer acquisition costs and possible pricing pressure in areas like weight loss and sexual health.
• Builds a lower fair value using more cautious assumptions for revenue growth, profit margins, valuation multiples and share price targets from the more pessimistic analyst views.

Taken together, these two Narratives show how the same company can support very different conclusions once you plug in your own assumptions on growth, regulation and valuation. If you want to see the full versions and stress test your own view against other investors, Curious how numbers become stories that shape markets? Explore Community Narratives.

Do you think there's more to the story for Hims & Hers Health? 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.