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Omnicell (OMCL) Stock Looks Cheap Based On Cash Flow Value

Simply Wall St · 1d ago

Omnicell has had a rough long run on the market, and that raises a very specific question for you as an investor. Does the current US$36.41 share price line up with what the business may realistically produce in cash over time?

  • The stock has fallen 79.7% over the past 5 years, which puts the focus squarely on whether the cash it can generate still supports today’s valuation.
  • The business relies heavily on converting its installed base and new projects into steady cash inflows, so any shift in execution, margins or capital spending plans can change the timing and strength of those cash flows.
  • What if you looked at Omnicell through its earnings instead? See why Omnicell's 37.2x P/E tells a different valuation story.

The issue now is whether the current market price for Omnicell is justified by the cash flows implied by its intrinsic value estimate under a Discounted Cash Flow (DCF) approach.

If you want a reference point for how Omnicell’s cash flow story compares, it can help to line it up against 34 high quality undervalued stocks

Is Omnicell a Bargain on Cash Flow?

The Discounted Cash Flow (DCF) approach looks at what Omnicell might return to shareholders in cash over time, adjusted back to today’s dollars. On this model, the latest twelve month free cash flow sits at about $126.6 million, which gives you a reasonably sized base of existing cash generation rather than a purely story driven projection.

Analysts and internal estimates in the 2 Stage Free Cash Flow to Equity model point to growing free cash flow in the coming decade, with the first few years based on external forecasts and the later years on more gradual growth assumptions. When those future cash streams are discounted and added together, the DCF outcome suggests Omnicell’s estimated intrinsic value is substantially above the current $36.41 share price. This implies that the market price reflects a more cautious outlook for the durability and timing of those cash flows than the model does. Find out what Omnicell could be worth using our Discounted Cash Flow (DCF) estimate.

The Omnicell Narrative: What Would Justify Today's Price?

Simply Wall St Narratives for Omnicell pick up where the valuation puzzle leaves off and spell out what would need to happen to Omnicell's growth, margins and earnings for the stock to be worth materially more or less than today’s price, based on different viewpoints shared on the Community page. Instead of relying on a single multiple or model output, each narrative lays out its own fair value assumptions so you can later compare those inputs with the financial results as they are reported.

One of the top community narratives on Omnicell: 19% undervalued

"The main thing that has to go right is that the Titan XT and OmniSphere refresh, along with growing specialty pharmacy and cloud service revenues…"

Discover why this Narrative puts Omnicell at 19% undervalued.

One more angle on Omnicell that could change the story

Cash flow models only tell part of the story, because the people setting priorities and how they are rewarded can push a business in very different directions over time. See who runs Omnicell and how they are paid.