Laboratory Corporation of America Holdings (LH)

Conclusion

Labcorp Holdings Inc. provides laboratory testing services through its Diagnostics Laboratories and Biopharma Laboratory Services segments. At a price of 371.83 USD on 2026-11-09, the market capitalisation is 30.2 billion USD and the enterprise value is 36.7 billion USD.

The verdict is overvalued. The price-to-earnings ratio of 30.07 compares with a ten-year median of 18.78, a premium of 60.1%, and the enterprise value to EBITDA of 17.01 compares with a median of 12.95, a premium of 31.4%. The DCF gives 254.84 USD per share at a discount rate of 9.07%, and the fair value from historical multiples is 263.78 USD. The fair value band runs from 207.45 to 311.17 USD with a midpoint of 259.31 USD, a margin of safety of -30.3% at a price of 371.83 USD. The reverse DCF implies growth of 9.3%, while revenue has compounded at -0.04% over five years and free cash flow per share at -4.26%.

What holds the case up is free cash flow conversion of 1.28 on a trailing twelve-month basis, a Piotroski score of 7 out of 9, and an Altman Z-score of 3.56. What would break it is return on invested capital of 7.48% sitting below a WACC of 8.11%, net debt to EBITDA of 3.02, and the flat five-year revenue trend. Analysts have also cut next-year estimates, with 5 downward revisions against 2 upward in the last 30 days.

Financial health

Financial health is green, supported by an Altman Z-score of 3.56 and a current ratio of 1.41, while net debt to EBITDA of 3.02 and interest coverage of 6.29 are neutral. The quick ratio is 1.00 and debt to equity is 0.77. The Altman Z-score falls in the safe zone, but that model was designed for manufacturers and this company is not one, so the reading is indicative only. Insolvency risk: low, about 0.4% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is green, with four of four checks assessed as good. Free cash flow conversion is 1.28 on a trailing twelve-month basis and 1.28 on the five-year average, and the accrual ratio is -0.04, which points to cash-backed earnings. Stock-based compensation is 0.87% of revenue, and free cash flow after it is 1.16 billion USD. The share count has fallen at a five-year compound rate of 3.1%, reflecting buybacks. The Piotroski score is 7 out of 9 and the Beneish M-score of -2.52 reads as unlikely to signal manipulation. The company beat earnings estimates in all 8 of the last quarters, with an average surprise of 2.96%. Current-year estimates rose 0.56% over 90 days, while next-year estimates fell 0.88%, with 5 downward revisions against 2 upward in the last 30 days.

Profitability

Profitability is yellow, with one good signal and three neutral ones. The gross margin of 27.95% sits below its ten-year median of 29.71%, the operating margin of 11.12% below 11.90%, and the net margin of 6.88% below 7.70%. Operating margin stability is 0.35. Return on invested capital is 7.48% against a WACC of 8.11%, and the given ROIC minus WACC value is -0.64%, which is neutral. The five-year median ROIC is 6.9%. Return on equity is 11.35%, but the DuPont split shows leverage at work: a net margin of 6.28%, an asset turnover of 0.76 and an equity multiplier of 2.13 at year-end 2025.

Growth

Growth is red, with two bad signals against one good one. Revenue compounds at 5.55% over three years, -0.04% over five years and 4.86% over ten years, and it grew in 8 of 10 comparable years. Earnings per share compound at -9.18% over three years, -8.01% over five years and 9.19% over ten years. Free cash flow per share compounds at -3.65% over three years, -4.26% over five years and 7.14% over ten years. The next-year earnings estimate implies growth of 5.98%, which is neutral.

Valuation

Valuation is red, with the verdict assessed as bad. The price-to-earnings ratio of 30.07 is a premium of 60.1% to its ten-year median of 18.78, and price to free cash flow of 23.46 is a premium of 42.1% to 16.51. Price to book of 3.41 is a premium of 34.3% to 2.54, and price to sales of 2.07 is a premium of 25.4% to 1.65. The DCF gives 254.84 USD per share at a discount rate of 9.07%, with 55.2% of the value in the terminal value. The fair value from historical multiples is 263.78 USD. The fair value band is 207.45 to 311.17 USD with a midpoint of 259.31 USD, a margin of safety of -30.3%. The reverse DCF implies growth of 9.3%, against five-year revenue growth of -0.04% and five-year free cash flow per share growth of -4.26%. The fair value is an order-of-magnitude estimate built on fixed assumptions, a 5% equity risk premium and capped growth, not a price target. The dividend yield is 0.79% and the payout on free cash flow is 18.45%.

Risks

The main risk is that return on invested capital stays below the cost of capital. At 7.48% against 8.11%, the business earns slightly less than its funding costs, so growth would add little value unless margins recover. Net debt to EBITDA of 3.02 limits flexibility if earnings keep falling, and interest coverage of 6.29 would tighten if operating profit declined. Negative five-year revenue and earnings trends would make the implied growth of 9.3% harder to reach. Falling next-year estimates would also weigh on the market's view. No values are missing from the metrics. This analysis cannot see the debt maturity schedule or revenue by segment, so it cannot judge refinancing timing or which business lines drive the trends.