Cencora Inc. (COR)

Conclusion

Cencora distributes pharmaceutical products in the United States and internationally, serving acute care hospitals, retail and mail-order pharmacies, and other healthcare providers. It also supplies services and products to pharmaceutical manufacturers and to the companion and production animal markets. The shares stood at 345.76 USD on 9 November 2026, giving a market capitalisation of 65.98 billion USD.

The verdict is fair. The P/E of 18.9x sits at a premium of -12.9% to its ten-year median of 21.7x, and the EV/EBITDA of 11.8x at -4.8% against a median of 12.4x. The discounted cash flow gives 486.26 USD per share at a discount rate of 8.87%. The fair value band runs from 340.48 to 510.73 USD, with a midpoint of 425.60 USD and a margin of safety of 23.1% at the current price. The fair value from historical multiples is 364.95 USD. The reverse DCF implies growth of 3.2% a year, against revenue growth of 9.5% a year over five years, so the price asks for far less growth than the company has delivered.

The strongest numbers are a ROIC of 38.5% against a WACC of 8.1%, free cash flow conversion of 111.4% over the last twelve months, and interest coverage of 10.4x. The weakest are an operating margin of 1.16%, a current ratio of 0.94, and estimate revisions for next year that have been negative, with no upward revisions and four downward in the last 30 days. If margins narrow further or estimates keep falling, the gap between today's price and the fair value band would be tested.

Financial health

Financial strength is green, held up by net debt to EBITDA of 1.04x and interest coverage of 10.4x, while the current ratio of 0.94 is neutral. The quick ratio is 0.50 and debt to equity is 3.06. Debt growth relative to revenue growth stands at -4.4% over five years. The Altman Z-score is not available because inputs it needs are missing, so no zone can be given; the Altman model was designed for manufacturers, and Cencora is a distributor. Insolvency risk: low, about 3.7% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is green, supported by free cash flow conversion of 111.4% over the last twelve months and 157.6% over five years, and by an accrual ratio of -1.6%. Free cash flow after stock-based compensation is 3.88 billion USD, but the stock-based compensation figure itself is not available. The share count has fallen at a compound rate of 1.4% a year over five years, which points to buybacks. The Piotroski score is 7 of 8 evaluable tests. The Beneish test is assessed as good, but no M-score value is given. The company beat earnings estimates in all 8 of the last quarters, with an average surprise of 3.2%. Estimates have been trimmed: the current-year estimate changed -0.9% over 90 days and the next-year estimate -0.5%.

Profitability

Profitability is yellow. ROIC against WACC is assessed good, while the operating margin is assessed bad. Gross margin is 4.1% against a ten-year median of 2.9%. Operating margin is 1.16% against a median of 1.10%, and net margin is 1.03% against a median of 0.59%. Margin stability is 10.2%. ROIC is 38.5% against a WACC of 8.1%, with a given ROIC minus WACC value of 30.4%, and its five-year median is 40.1%. Return on equity of 94.6% is inflated by leverage. The DuPont split shows a net margin of 1.03%, an asset turnover of 3.87x and an equity multiplier of 23.7x, so the return comes from fast turnover on a thin margin, backed by a large amount of debt.

Growth

Growth is green. Revenue compound growth is 8.8% over three years, 9.5% over five and 8.7% over ten. EPS compound growth is 28.1% over three years, 19.4% over five and 11.0% over ten. Free cash flow per share grew 5.8% over three years, 13.3% over five and 5.2% over ten. Revenue grew in all 10 of 10 comparable years. The next-year EPS growth estimate is 11.4%. The long record of steady revenue expansion is far above the 3.2% growth implied by the current price.

Valuation

Valuation is yellow, and its only assessed signal is the neutral verdict. The P/E of 18.9x is at a premium of -12.9% to its median of 21.7x, and the EV/EBITDA of 11.8x at -4.8% to 12.4x. Price to free cash flow of 17.0x is at a premium of 5.1% to its median of 16.2x. Price to sales of 0.20x is at a premium of 46.9% to 0.13x, and price to book of 17.9x is at a premium of -46.6% to 33.6x. The DCF gives 486.26 USD per share at a discount rate of 8.87%, with a terminal share of 58.7%. The fair value band runs from 340.48 to 510.73 USD, with a midpoint of 425.60 USD and a margin of safety of 23.1%. The fair value is an order of magnitude built on fixed assumptions, not a price target. Dividend yield is 0.72%, forward yield 0.78%, and the payout on free cash flow 12.3%.

Risks

The operating margin of 1.16% is the most exposed number: a small rise in costs or pressure on prices would absorb most of the profit, and it would weaken the earnings base behind the fair value. The current ratio of 0.94 means short-term obligations are close to current assets, so liquidity relies on steady operating cash flow. Net debt to EBITDA of 1.04x and interest coverage of 10.4x would both worsen if earnings fell. Negative estimate revisions point the same way. Not available: the inputs for the Altman Z-score, the stock-based compensation figure and the Beneish M-score value. This analysis has limits: it contains no debt maturity schedule and no revenue by segment, so refinancing needs and the mix of business cannot be assessed.