On the four Ms, Molina Healthcare Inc earns 90 for management and 39 for moat. The management score rests on a return on invested capital of 7.6% and a gross margin of 13.1% — figures that describe a business turning capital into profit efficiently. Debt sits at 0.97x equity. The narrow moat and exceptional management are not the same judgement, and the gap between them is where the argument about this business sits.
The price anchors are built on deliberately conservative assumptions. Growth is modelled at 15.0% a year, below the 19.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 27.9x. That produces an intrinsic value of $5.30, a 10-CAP price of $58.32 and a payback time price of $92.07, with the value zone set at the highest of the three, $92.07. Today's price of $180.85 is 96% above it.
The price is above the value zone and the business scores 39 for moat and 90 for management. Neither test argues for paying up here.
| Price | $180.85 |
| Market cap | $9.4B |
| P/E ratio | 951.8x |
| Return on invested capital | 7.6% |
| Gross margin | 13.1% |
| Debt to equity | 0.97x |
| Free cash flow yield | -7.2% |
| Growth rate used | 15.0% |
| Growth rate measured | 19.0% |
| Exit multiple assumed | 27.9x |
| Company | Moat | Buy price |
| The Cigna Group (CI) | 62 | $480.12 |
| Elevance Health (ELV) | 49 | $389.00 |
| CVS Health Corporation (CVS) | 37 | $115.44 |
| UnitedHealth Group (UNH) | 43 | $369.90 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Molina Healthcare Inc rather than accepting ours.