Is CVS Health Corp. overvalued or undervalued?

As of 1 May 2025, CVS Health Corp. has moved from a valuation grade of very attractive to very expensive. The company is currently considered overvalued. Key ratios include a P/E ratio of 17, an EV to EBITDA of 9.97, and a Price to Book Value of 1.39. In comparison, a peer like Walgreens Boots Alliance has a P/E ratio of approximately 18.07 and an EV to EBITDA of 10.34, indicating that CVS is slightly less expensive on a P/E basis but still carries a high valuation relative to its earnings potential.
Despite a strong dividend yield of 239.67%, the company's return on equity (ROE) stands at 8.14%, which is relatively low compared to industry standards. Over the past year, CVS has underperformed the S&P 500, returning 8.86% compared to the index's 10.26%, reinforcing the notion that the stock may be overvalued given its recent performance and valuation metrics.