Is CVS Health Corp. overvalued or undervalued?

As of 17 October 2025, the valuation grade for CVS Health Corp. moved from very expensive to expensive, indicating a shift in perception regarding its market value. The company is currently considered overvalued based on its valuation metrics. The P/E ratio stands at 17, while its peer, which is also in the retailing industry, has a higher P/E of 19.83. Additionally, CVS's EV to EBITDA ratio is 9.97, which is relatively low compared to the peer average, suggesting that the company may not be as attractive as its competitors.
In terms of returns, CVS Health Corp. has outperformed the S&P 500 over the past year with a return of 29.61% compared to the S&P 500's 14.08%. However, over the longer term, particularly in the 3-year and 10-year periods, CVS has significantly lagged behind the S&P 500, with returns of -9.21% and 38.48%, respectively. This mixed performance reinforces the notion that while the stock may have short-term momentum, its long-term valuation appears stretched.