US Equities Analysis

DGX — Quest Diagnostics

Research evidence pack

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 14.2%
Profit Margins 9.08%
Return on Equity 14.54%
Return on Assets 6.35%
Free Float 0.11B
Dividend Yield 1.64%
Short Int % Utilisation 3.11%

2.2 Growth

Metric Value
Revenue Growth 9.2%
Free Cash Flow 0.95B
EBITDA 13.01 (Ratio)
Enterprise Value 28.95B
EV/Revenue 2.57
EV/EBITDA 13.01

Revenue growth of 9.2% indicates steady, moderate expansion.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 36.73%
Risk / Std Dev (Ann.)* 23.82%
1-Year Price Return* 32.68%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $234.40
52-Week Range $171.18 – $240.13
Observation Count 251 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $11.04B
Prior annual revenue $9.87B
EBIT $1.59B
Tax rate 23.80%
NOPAT = EBIT × (1 − tax rate) $1.22B
Forecast start-growth basis 11.78%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $1.22B
Add: depreciation & amortisation $570.00M
Less: capital expenditure -$527.00M
Less/(add): working-capital cash-flow movement $50.00M
Current unlevered FCFF $1.31B

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 11.78% $1.36B $637.15M -$589.08M $55.89M $1.46B $1.42B
2 9.46% $1.49B $697.43M -$657.97M $61.18M $1.59B $1.44B
3 7.14% $1.59B $747.23M -$719.04M $65.55M $1.69B $1.43B
4 4.82% $1.67B $783.25M -$768.47M $68.71M $1.75B $1.39B
5 2.50% $1.71B $802.83M -$802.83M $70.42M $1.78B $1.33B

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 0.55
Cost of equity 7.73%
Pre-tax cost of debt 4.05%
WACC 6.79%
WACC validation requires assumption review

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $42.56B
Implied terminal EV / EBITDA 13.96x
Terminal value as % of enterprise value 81.39%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $7.00B
Present value of terminal value $30.64B
Indicated enterprise value $37.65B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $37.65B
Less: gross interest-bearing debt $6.58B
Add: cash and equivalents $420.00M
Add: affiliate investments $0.00
Less: minority interests $116.00M
Indicated common equity value $31.37B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 113,000,000.00
Share-count basis reported diluted weighted-average shares
Current market price $236.68
DCF indicative value per share $277.57
Indicative value vs. market price 17.28%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range review required
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% within review band

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 4/4 evidenced checks
Lynch-inspired balance-and-growth checks 4/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:29:56.178656 UTC; latest reported fiscal period: 2025-12-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

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