A strong performer from today's afternoon trading session is UnitedHealth, whose shares rose 1.1% to $525.01 per share. For those of you thinking about investing in the stock, here is a brief value analysis of the stock using the company's basic fundamental ratios.
UnitedHealth Is Fairly Priced to Earnings but Overpriced Compared to Its Book Value:
UnitedHealth Group Incorporated operates as a diversified health care company in the United States. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 30.21 and an average price to book (P/B) ratio of 4.08. In contrast, UnitedHealth has a trailing 12 month P/E ratio of 22.0 and a P/B ratio of 5.2.
UnitedHealth's PEG ratio is 1.47, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Growing Revenues With Increasing Reinvestment in the Business:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $226,247 | $242,155 | $257,141 | $287,597 | $324,162 | $359,982 |
| Revenue Growth | n/a | 7.03% | 6.19% | 11.84% | 12.71% | 11.05% |
| Operating Margins | 8% | 8% | 9% | 8% | 9% | 9% |
| Net Margins | 5% | 6% | 6% | 6% | 6% | 6% |
| Net Income (MM) | $11,986 | $13,839 | $15,403 | $17,285 | $20,120 | $21,687 |
| Net Interest Expense (MM) | $1,400 | $1,704 | $1,663 | $1,660 | $2,092 | $3,092 |
| Depreciation & Amort. (MM) | $2,428 | $2,720 | $2,891 | $3,103 | $3,400 | $3,980 |
| Earnings Per Share | $12.19 | $14.33 | $16.03 | $18.08 | $21.18 | $23.03 |
| EPS Growth | n/a | 17.56% | 11.86% | 12.79% | 17.15% | 8.73% |
| Diluted Shares (MM) | 983 | 966 | 961 | 956 | 950 | 936 |
| Free Cash Flow (MM) | $13,650 | $16,392 | $20,123 | $19,889 | $23,404 | $26,435 |
| Capital Expenditures (MM) | $2,063 | $2,071 | $2,051 | $2,454 | $2,802 | $3,293 |
| Current Ratio | 0.73 | 0.69 | 0.74 | 0.79 | 0.77 | 0.8 |
| Total Debt (MM) | $36,554 | $40,678 | $43,467 | $46,003 | $57,623 | $5,290 |
| Net Debt / EBITDA | 1.3 | 1.33 | 1.05 | 0.91 | 1.08 | -0.95 |
UnitedHealth has growing revenues and increasing reinvestment in the business and a strong EPS growth trend. Additionally, the company's financial statements display positive cash flows and healthy leverage. However, the firm suffers from weak operating margins with a stable trend and not enough current assets to cover current liabilities.
