Finny logo
Finny logo
Dibs:
Dibs:
0

Unitedhealth Group (UNH) earnings preview: expect strong revenue growth

4:49 am ET, 13 Jul 2018

UnitedHealth Group Incorporated (UNH) is expected to report earnings on July 17 before market open.  The report will be for the fiscal Quarter ending June 2018. Shares are trading at 254.59, down -0.37%.

What are UNH earnings expectations?  What news will the market be watching out for?  

The market is watching out for new emerging competition from Amazon.  Two weeks ago, Amazon announced it will purchase mail-order pharmacy startup PillPack. This move will give Amazon a foothold within the pharmaceutical supply chain and was the most logical step for the online conglomerate to make as we believed retail pharmacy was going to be the easiest segment of the pharmaceutical supply chain for Amazon to enter. 

We believe it will be tough for the Amazon to create any major disruption within the healthcare space given the insurance dynamics that drive the market.  From our perspective, any new competitor will need to deal with the large and powerful customers. Despite what some market participants believe, the true end customer in the pharmaceutical space is not the consumer of drugs, but rather the insurer/employer/government that pays for the health benefits of the consumer. 

UnitedHealth possesses material competitive advantages that should allow it to produce outsized economic profits over an extended period. While the business outlook for US health insurers is filled with uncertainty, United has built itself into a powerful all-encompassing healthcare player we believe will be a dominant force over the next several decades. 

United has constructed its Optum division into one of the most powerful healthcare-services players and has positioned the firm advantageously for the long term. With the acquisition of Catamaran in mid-2015, United has built its PBM operations into a major force in the pharmaceutical market. From our perspective, OptumRx will be a strong value driver for United over the next several years.

Unitedhealth Group, Inc. has a history of beating analysts’ earnings estimates. In the past four quarters, the company: 

  • Beat analyst EPS estimates by 8 cents ($2.46 actuals vs. $2.38 forecast) in FQ2’17;
  • Beat analyst EPS estimates by 9 cents ($2.66 actuals vs. $2.57 forecast) in FQ3’17;
  • Beat analyst EPS estimates by 8 cents ($2.59 actuals vs. $2.51 forecast) in FQ4’17;
  • Beat analyst EPS estimates by 13 cents ($3.04 actuals vs. $2.91 forecast) in FQ1’18.

For FQ2’18, EPS is expected to grow by 23% year-over-year to $3.03, while revenue is expected to grow 12% year-over-year to $56.11 billion.  

Over the last month, UnitedHealth Group Incorporated (UNH) returned +0.32%.

UnitedHealth Group Incorporated (UNH) average analyst price target ($273.00) is 7.23% above its current price ($254.59).

For the latest price and information on UnitedHealth Group Incorporated, please visit Finstead and search for "UNH price" or "UNH news".

UnitedHealth Group Incorporated (UNH) Stock Guide

Updated at: 6:34 pm ET, 18 Sep 2020

Before we start: if you're looking for UNH stock price, you can quickly find it out by visiting Finny and typing "UNH quote". If you're looking for a quick scoop on UNH stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "UNH". You'll get all this info in one place. Or you can just type "UNH news" to get the latest stock news.

Looking to buy or sell UnitedHealth Group Incorporated (UNH)? Interested in getting the full scoop on UNH, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this UNH stock guide, we'll address key questions about UNH, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are UNH earnings?
2. What is UNH dividend?
3. What is UNH dividend yield?
4. UNH buy or sell? What is UNH Finny Score?
5. What are the reasons to buy UNH? Why should I buy UNH stock?
6. What are the reasons to sell UNH? Why should I sell UNH stock?
7. What are UNH key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are UNH earnings?

UNH trailing 12-month earnings per share (EPS) is $17.79.

2. What is UNH dividend?

UNH forward dividend is $5.00.

3. What is UNH dividend yield?

UNH forward dividend yield is 1.6%.

Analysis

4. UNH buy or sell? What is UNH Finny Score?

#{finnyScore:50}Our quantitative analysis shows 4 reasons to buy and 4 reasons to sell UNH, resulting in Finny Score of 50.

5. What are the reasons to buy UNH? Why should I buy UNH stock?

Here are the reasons to buy UNH stock:

  • UnitedHealth has the largest and most diverse membership base within the MCO market, which gives it significant competitive advantages.
  • The firm’s diversification into high margin healthcare IT services niche gives it the opportunity to increase its bottom line through a high growth market niche.
  • As United solidifies its major PBM operations, it will reap significant long-term economic profits from the 1 billion annual prescription claims it now possesses.
  • The company revised its 2018 financial outlook to reflect the effects of the U.S. corporate tax law changes, dedicating a significant portion of the benefits to accelerate investments in data analytics, technology and innovations for better serving consumers and care systems, and to advance new and existing business platforms. UnitedHealth Group now expects 2018 net earnings of $11.65 to $11.95 per share and adjusted net earnings of $12.30 to $12.60 per share (versus previous adjusted net earnings of $10.55-$10.85).
  • In a year’s time, shares of UnitedHealth have returned 45.5%, outperforming the industry’s growth of 42.8%. The company’s strong business fundamentals and strong earnings guidance will keep the stock momentum alive.
  • The company has grown its revenues consistently over the past several years. It has witnessed a CAGR of 11% from 2006-2016. The trend continued in 2017 which saw revenue rise by 9% year over year.
  • UnitedHealth’s health service business, branded as Optum, is becoming an increasingly valuable business. It is also crucial to the company’s diversification strategy. The primary growth drivers for Optum are pharmacy care services, care delivery, technology, government services, and international. Management is considering the expansion of the health service business to 35–40% of operating income over the long term.
  • UnitedHealth’s membership has been growing consistently over many years and the trend continued in 2017 with medical enrollment up 1.4% year over year. Membership growth was primarily driven by growth in government business, partly offset by declines in the commercial and international segments. In 2018, Medicare and Medicaid business will further fuel membership growth.
  • UnitedHealth is aggressively expanding its international business due to increasing regulations in the U.S. The major deal to acquire Brazil-based Amil Participações S.A attests to the fact. Other overseas acquisitions made by the company include Dubai-based Al Sagr National Insurance Co., which will allow the company to expand in the Middle East.
  • UnitedHealth has a healthy balance sheet with unparalleled financial flexibility. The company has also been aggressively repurchasing shares. Historically, the company had favored share buybacks and mergers over dividend payments as ways to deploy capital.
  • UNH quarterly revenue growth was 2.50%, higher than the industry and sector average revenue growth (2.06% and 0.83%, respectively). See UNH revenue growth chart.
  • UNH profitability is improving. The YoY profit margin change was 0.10 percentage points. See UNH profitability chart.
  • UNH forward dividend yield is 1.60%, higher than the industry (0.37%) and sector (0.16%) forward dividend yields. See UNH forward dividend chart.
  • UNH cash to debt ratio is 0.56, higher than the average industry (0.30) and sector (0.16) cash to debt ratio. See UNH cash to debt chart.

6. What are the reasons to sell UNH? Why should I sell UNH stock?

Let's look at the reasons to sell UNH stock (i.e., the bear case):

  • The overhaul of the U.S. healthcare market has built unprecedented uncertainty into the operating environment for UnitedHealth.
  • Increased transparency and competition will pressure pricing and profits for MCOs.
  • MA rates will be under a steep downward trend, pressuring one the largest sources of revenue for UnitedHealth.
  • In 2017, the company witnessed membership declines in the Commercial and International segments. The company has further guided a loss of 100,000 to 200,000 members in fee- based category due to a large public sector customer loss recently. The international segment revenues are expected to remain flat or decline by 150,000 due to macro-economic contraction in the private healthcare market in Brazil, where the company operates.
  • The reintroduction of the tax creates an earnings headwind in 2018 due to an increase in tax rate, continued market share gains in its benefits businesses, the company’s inability to recover its customers in Medicare business, timing in the commercial business and the non-tax deductibility of the fee itself, creating a 75 cent per share after-tax drag on earnings year-over-year.
  • UnitedHealth's valuation looks stretched at the current level. Looking at the company’s price-to-earnings ratio, investors may not want to pay any further premium. The company is currently trading at a forward 12-month price-to-earnings ratio of 22.1 which is above its median range of 19.3.
  • UNH stock price ($313.24) is close to the 52-week high ($323.70). Perhaps now is a good time to sell? See UNH price chart.
  • UNH Price/Book ratio is 4.67, which is high compared to its industry peers’ P/B ratios. See UNH forward Price/Book ratio chart.
  • UNH Price/Sales ratio is 1.20, which is high compared to its industry peers’ P/S ratios. See UNH forward Price/Sales ratio chart.
  • UNH Enterprise Value/Revenue multiple is 1.30, which is high compared to its industry peers’ Enterprise Value/Revenue multiples. See UNH Enterprise Value/Revenue chart.

Key Stats

7. What are UNH key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for UNH:

Metrics UNH
Price $307.49
Average Price Target / Upside $345.80 / 12.46%
Average Analyst Rating Buy
Forward Dividend Yield 1.51%
Industry Health Care Plans
Sector Healthcare
Number of Employees 300,000
Market Cap $305.87B
Forward P/E Ratio 17.44
Price/Book Ratio 1.23
Revenue (TTM) $247.81B
YoY Quarterly Revenue Growth 2.50%
Profit Margin 6.90%

If you liked this analysis, check out Stock Guides for other stocks.

Follow Us