Cencora 10 Cap

Market Cap as of 11/19/25: $70,008,129,200
Operating Cash flow 2024: $3,484,685,000
Maint Cap Ex = $487,170,000
Owners Earnings = $2,997,515,000

Cap Rate = 2,997,515,000/70,008,129,200 = 4.2%


Using my Vital Farms 10-Cap evaluation to update my Cencora 10-Cap.

Owners Earnings x 10 = 10 Cap Price
Owners Earnings =
Net Income +
Depreciation & Amortization +
Net Change: Accounts Receivable +
Net Change: Accounts Payable +
Income Tax +
Maintenance Capital Expenditures

I got the formula for Owner earnings from the 1986 Annual Shareholder Letter written by Buffett.

All of these values were reported in the 2025 Cencora 10k except the Maintenance Capital Expenditures, I will dive deeper into the Maint CapEx below. Here is the formula filled in.

Net Income +$1,567,814M
D&A +$1,068,416M
+ Net Change: Accounts Receivable −$(1,923,411)M (added as negative per formula)
+ Net Change: Accounts Payable +$3,693,364M
+ Income Tax +$690,522M
+ Maintenance CapEx−$(487,173)M (negative per formula) = Owner Earnings ~ $4,609,532M ≈ $4.61 Billion

$4.61B x 10 = $46.1 Billion Market Cap to equal 10 cap price, or $237 a share.
Current Market cap is $55.83B, or $287 a share.
Above the calculated 10 cap price.
Owner Earnings/Market Cap = 4.61B/55.83B = 8.2% Cap Rate.

Calculating 10 Cap this way was significantly higher than my original calculation for two reasons.
1. One is the Owner Earnings formula used here is the original provided by Buffett instead of the one from the Youtube video. This adjusted the Owner Earnings up quite a bit.
2. Two is that the market cap for Cencora has dropped since my last evaluation, thus increasing the cap rate.

For Maintenance Capital Expenditure they did not explicitly call out Maintenance versus growth but they did address that 2025 and upcoming 2026 have seen an increase in growth oriented spending. Thus i used the 2024 CapEx which had been stable for at least 2 years as a substitute for Maintenance CapEx. I probably should have added some in for the Maintenance spend that is going to be there as a result of the current growth spend. If i do that by assuming 50% of growth spend (~$210 Million) will translate to maintenance (big assumption) then that puts Owner Earnings at $4.4 Billion. Making 10-Cap price $44 Billion Market Cap or $226 a share.

This is a capital intensive business. Lots of money is required to operate the distribution network at the scale that they do. Meaning CapEx is going to stay high. They are also expanding there offerings through acquistions (3 in the last 2 years). They want to grow and continue expanding their reach and profitability. This has caused them to accumulate massive debt along the way. We will see how that translates long term. Looks promising from this lens if they can continue to grow and manage paying down their obligations.

Sentiment: Neutral