Elevance Health shares fell by -2.8% during the day's afternoon session, and are now trading at a price of $382.14. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
a Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:
Elevance Health, Inc., together with its subsidiaries, operates as a health benefits company in the United States. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 26.07 and an average price to book (P/B) ratio of 3.53. In contrast, Elevance Health has a trailing 12 month P/E ratio of 13.9 and a P/B ratio of 2.02.
Elevance Health has moved -19.7% over the last year compared to 31.8% for the S&P 500 — a difference of -51.5%. Elevance Health has a 52 week high of $567.26 and a 52 week low of $379.29.
The Firm Has a Highly Leveraged Balance Sheet:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $92,105 | $104,213 | $121,867 | $138,639 | $156,595 | $171,340 |
| Operating Margins | 6% | 6% | 5% | 6% | 5% | 5% |
| Net Margins | 4% | 5% | 4% | 4% | 4% | 3% |
| Net Income (M) | $3,750 | $4,807 | $4,572 | $6,158 | $5,894 | $5,987 |
| Net Interest Expense (M) | $753 | $746 | $784 | $798 | $851 | $1,030 |
| Depreciation & Amort. (M) | $124 | $147 | $1,154 | $1,302 | $1,675 | $1,745 |
| Diluted Shares (M) | 264 | 260 | 254 | 247 | 243 | 237 |
| Earnings Per Share | $14.19 | $18.47 | $17.98 | $24.95 | $24.28 | $25.22 |
| EPS Growth | n/a | 30.16% | -2.65% | 38.77% | -2.69% | 3.87% |
| Avg. Price | $235.8 | $264.55 | $269.03 | $368.19 | $469.26 | $382.14 |
| P/E Ratio | 16.23 | 14.06 | 14.76 | 14.58 | 19.11 | 15.06 |
| Free Cash Flow (M) | $2,619 | $4,984 | $9,667 | $7,277 | $7,247 | $6,765 |
| CAPEX (M) | $1,208 | $1,077 | $1,021 | $1,087 | $1,152 | $1,296 |
| EV / EBITDA | 17.65 | 16.34 | 13.73 | 13.9 | 16.39 | 13.99 |
| Total Debt (M) | $35,283 | $37,172 | $39,370 | $43,913 | $46,198 | $48,141 |
| Net Debt / EBITDA | 6.04 | 5.26 | 4.55 | 4.2 | 4.18 | 4.4 |
| Current Ratio | 1.56 | 1.66 | 1.55 | 1.47 | 1.4 | 1.44 |
Elevance Health has rapidly growing revenues and a flat capital expenditure trend, generally positive cash flows, and a strong EPS growth trend. However, the firm has a highly leveraged balance sheet. Finally, we note that Elevance Health has decent operating margins with a stable trend and just enough current assets to cover current liabilities, as shown by its current ratio of 1.44.
