We've been asking ourselves recently if the market has placed a fair valuation on UnitedHealth. Let's dive into some of the fundamental values of this Large-Cap Health Care company to determine if there might be an opportunity here for value-minded investors.
an Increase in Expected Earnings Improves Its Value Outlook but Trading Above Its Fair Price:
UnitedHealth Group Incorporated operates as a health care company in the United States and internationally. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 22.94 and an average price to book (P/B) ratio of 3.19. In contrast, UnitedHealth has a trailing 12 month P/E ratio of 17.6 and a P/B ratio of 3.19.
UnitedHealth has moved -42.8% over the last year compared to 15.2% for the S&P 500 — a difference of -58.0%. UnitedHealth has a 52 week high of $622.83 and a 52 week low of $234.6.
EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $242,155 | $257,141 | $287,597 | $324,162 | $371,622 | $400,278 |
| Operating Margins | 8% | 9% | 8% | 9% | 9% | 8% |
| Net Margins | 6% | 6% | 6% | 6% | 6% | 4% |
| Net Income (M) | $13,839 | $15,403 | $17,285 | $20,120 | $22,381 | $14,405 |
| Net Interest Expense (M) | $1,704 | $1,663 | $1,660 | $2,092 | $3,246 | $3,906 |
| Depreciation & Amort. (M) | $2,720 | $2,891 | $3,103 | $3,400 | $3,972 | $1,000 |
| Diluted Shares (M) | 966 | 961 | 956 | 950 | 938 | 929 |
| Earnings Per Share | $14.33 | $16.03 | $18.08 | $21.18 | $23.86 | $15.51 |
| EPS Growth | n/a | 11.86% | 12.79% | 17.15% | 12.65% | -35.0% |
| Avg. Price | $235.1 | $288.6 | $392.65 | $484.27 | $526.47 | $339.06 |
| P/E Ratio | 16.16 | 17.78 | 21.42 | 22.56 | 21.83 | 21.68 |
| Free Cash Flow (M) | $16,392 | $20,123 | $19,889 | $23,404 | $25,682 | $20,705 |
| CAPEX (M) | $2,071 | $2,051 | $2,454 | $2,802 | $3,386 | $3,499 |
| EV / EBITDA | 11.39 | 11.87 | 14.62 | 15.39 | 14.54 | 10.94 |
| Total Debt (M) | $40,678 | $43,467 | $46,003 | $57,623 | $62,537 | $76,904 |
| Net Debt / EBITDA | 1.33 | 1.05 | 0.91 | 1.08 | 1.02 | 1.55 |
| Current Ratio | 0.69 | 0.74 | 0.79 | 0.77 | 0.79 | 0.83 |
UnitedHealth has growing revenues and increasing reinvestment in the business and strong operating margins with a stable trend. Additionally, the company's financial statements display generally positive cash flows and healthy leverage levels. However, the firm suffers from EPS growth achieved by reducing the number of outstanding shares and not enough current assets to cover current liabilities because its current ratio is 0.83.
