As of July 15, 2023, UnitedHealth Group Inc (UNH, Financial), one of the largest private health insurers globally, is trading at $480.17 per share. This marks a 7.24% change in the day's trading. With a market capitalization of $447.1 billion and sales reaching $333.5 billion, the company's financial robustness is evident. The GuruFocus value indicator reveals a GF Value of $548.81, suggesting that UnitedHealth Group's stock is modestly undervalued.
UnitedHealth Group provides medical benefits to 50 million members worldwide, including 5 million outside the U.S. at the end of 2021. As a leader in employer-sponsored, self-directed, and government-backed insurance plans, UnitedHealth Group has obtained significant scale in managed care. Its continued investments in its Optum franchises have created a healthcare services colossus spanning everything from medical and pharmaceutical benefits to providing outpatient care and analytics to both affiliated and third-party customers.
Assessing UnitedHealth Group's Value
The GF Value Line is a unique indicator of a stock's intrinsic worth. For UnitedHealth Group, the GF Value suggests that the stock is modestly undervalued. This valuation is based on historical trading multiples, an adjustment factor from GuruFocus based on past performance and growth, and estimates of future business performance. Given this, the long-term return of UnitedHealth Group's stock is likely to be higher than its business growth.
Financial Strength and Profitability
Investing in companies with strong financial strength reduces the risk of permanent loss. UnitedHealth Group's cash-to-debt ratio is 0.66, which is lower than 73.68% of companies in the Healthcare Plans industry. However, its overall financial strength is 7 out of 10, indicating fair financial health.
Profitable companies are typically safer investments. UnitedHealth Group has been profitable for the past 10 years and has an operating margin of 8.13%, ranking better than 66.67% of companies in the Healthcare Plans industry.
Growth and Return on Invested Capital
UnitedHealth Group’s 3-year average revenue growth rate is lower than 61.11% of companies in the Healthcare Plans industry. However, its 3-year average EBITDA growth rate is 13.1%, ranking better than 76.47% of companies in the same industry.
Comparing the return on invested capital (ROIC) to the weighted average cost of capital (WACC) can provide insights into a company's profitability. UnitedHealth Group’s ROIC is 10.19, and its WACC is 6.37, indicating that the company is creating value for shareholders.
Conclusion
In summary, UnitedHealth Group appears to be modestly undervalued. The company's financial condition is fair, and its profitability is strong. Its growth ranks better than 76.47% of companies in the Healthcare Plans industry. To learn more about UnitedHealth Group stock, you can check out its 30-Year Financials here.
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