* Note: Prices are in Million (M) USD.
Description:
Tempus AI, Inc. (Ticker: TEM) is an innovative healthcare technology firm headquartered in Chicago, Illinois, that focuses on harnessing artificial intelligence and advanced data analytics to optimize medical decision-making and personalize treatment plans. With a robust platform that integrates genomic sequencing and clinical data, Tempus is driving advancements in precision medicine, particularly within oncology, and enhancing patient outcomes. As the healthcare sector increasingly emphasizes technology-driven solutions, Tempus's proactive approach and commitment to transforming medical practices present a significant investment prospect for institutional investors seeking growth in this dynamic market.
These criteria used Company's Cash, EBITDA and Debt balance to determines its fair value:
Cash : $186 M
Debt : $807 M
EBITDA : $-103 M
Net Debt (Debt - Cash): $621 M
Since Ebitda is less than 0, 0 points assigned.
This criteria used industry in which company operates:
Sector: Technology
Industry: Services-computer programming, data processing, etc.
Based on sector, 5 points assigned.
This criteria used Company's Price To Earning (P/E) Ratio to determines its fair value:
Forward PE Ratio: 41.26
Since Forward PE Ratio is greater than 35, 0 point assigned.
This criteria used Company's ability to convert Sales into free cash flow to determine fair value:
Using last 6 overlapping fiscal years (max 20).Average Free Cash Flow: $-204 M
Average Revenue: $342 M
Revenue Converted To Free Cash Flow (%): -59.6%
Since Free Cash Flow (FCF) to Revenue percentage is non-positive, 0 point assigned.
This criteria used company's growth potential to calculate its fair value:
Latest Revenue (2024-12-31): $693 M
Revenue 5 Years Ago (2019-12-31): $62 M
Total Growth over 5 Years: 1,017.4%
5-Year Revenue CAGR (Historical): 62.0%
Forward 5-Year CAGR (Tapered): 31.0%
Since historical Revenue CAGR is greater than 20, 5 points assigned.
This criteria used Company's ability to buy back its own share:
Latest Share Count (2024-12-31): $120 M
Share Count 5 Years Ago (2020-12-31): $170 M
Company is buying back its own shares, 3 points assigned.
This criteria used Company's dividend payout ratio to determine its fair value:
Next Year Earnings Per Share (EPS): $-0.12
Trailing 12-Month Earnings Per Share (EPS): $2.15
Average Earnings Per Share (EPS): $2.15
Dividend Per Share (DPS): $0
Payout Ratio: 0%
Dividend Yield: 0.00%
⚠️ Caution: Negative earnings detected — Further research is recommended - Next Fiscal Yr EPS: $-0.12
Since Dividend Per Share is less than or equal to 0, 0 point assigned.
Since Dividend Yield is less than 1, 0 point assigned.
This criteria used Company's Return On Equity (ROE%) to determine its fair value:
Insufficient valid ROE years (found 1; need ≥ 3). Dropping ROE-based PE.
This criteria used Company's current price to its 52 week low price to determines its fair value:
Current Price: $88.71
52-Week Low: $31.36
Threshold Price (15% Above 52-Week Low): $36.06
Since Current price is not within 15% threshold, 0 point assigned.
This criteria used Company's Market Cap to determines its fair value:
Market Capitalization: $15,609 M
Since Market Cap is between 10B - 100B, 2 points assigned.
% Exposure to Total Portfolio
Based on the market cap, we recommend do not exceed 3% exposure of Total Portfolio.
Warren Buffett's Owners' Earnings:
No positive free cash flow found (TTM or annual) to compute Owners' Earnings per share.
Note: Many fast-growing companies reinvest heavily, so Owners' Earnings may appear low.
Consider other factors in your valuation.
Value-Trade has assigned 15 points to above Tempus AI, Inc. Class A Common Stock (TEM) stock.
Heads up: One or more P/E inputs look exaggerated and may skew the blend.
• Growth Based PE 50.00 (>2× median)
Further research is recommended; please use your own due diligence.
In such cases, multiplying earnings by the long-run average P/E typically gives a closer, more reliable fair value.
Fair Value PE
20, Industry Based PE
20, Growth Based PE
50, Risk-Free Anchored PE (25% MoS)
18.47. Based on these 4 values, average assigned is
27.12. Value-Trades has assined P/E value
27.12. An average (Current Year EPS + Next Year EPS) earning per share is
$2.15.
Note: Final fair value is the lesser of the blended PE-based fair value and the simple average PE × EPS fair value.Fair value using multiple P/Es (blended): $58.30 (PE 27.12 × EPS $2.15)
Fair value using simple average PE × EPS: $58.30 (PE 27.12 × EPS $2.15)
Lesser of these two: $58.30
So the Final Fair Value is: $58.30
Understanding the Value-Trades P/E Blend (click to expand)
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What goes into the blended P/E?
- 20-Year Avg P/E — Long-run market baseline; conservative anchor.
- Fair Value P/E — Score-based (cash, debt, sector, etc.).
- Industry P/E — Peer group norm.
- Growth-Based P/E — Uses tapered growth rates, floored at 15.
- RCFC-Based P/E — Maps cash conversion efficiency.
- ROE-Based P/E — Higher ROE supports higher multiples.
- Risk-Free Anchored P/E — Macro floor tied to 10y yield w/ MoS.
How it works
- Extreme values are clamped/filtered (IQR method).
- Anchors (20y avg, RCFC/ROE, risk-free) are always kept if valid.
- Final fair value = min(Blended PE × EPS, Avg PE × EPS).
P/E Reference Summary
Using EPS: $2.15
| Source |
P/E Ratio |
Implied Fair Value |
| Value-Trades Assigned | 27.12 | $58.31 |
