UnitedHealth Group (UNH): A Quarterly Analysis for Maverick Investors

August 25, 2023

UnitedHealth Group (UNH), the nation’s largest health insurer, has shown consistent growth and resilience. Let’s investigate the details of the last two quarterly reports and additional financial data to analyze UNH’s performance and outlook.

August 25, 2023 Stock Price: $489.12

The Stock Price Trend: Bearish short-term and intermediate-term, but bullish long-term. We have reduced our position and watching for a reversal of trader sentiment before adding to it.

Second-Quarter Financials

UNH reported second-quarter revenues of $92.9 billion, surpassing expectations and demonstrating broad-based growth across its UnitedHealthcare insurance arm and Optum branches. Share earnings were reported at $6.14, in line with expectations. Additionally, UNH raised the low end of its full-year earnings outlook by $0.20 a share, indicating strong confidence in its future performance.

First-Quarter Financials

UNH’s first-quarter performance was strong, leading to an increased earnings outlook for the full year. The company’s strategy of expanding enrollment and offering diverse services contributed to impressive revenue growth. Despite rising costs, productivity gains helped mitigate the impact on the medical care ratio. UNH raised its earnings forecast for the year to a range of $24.50 to $25.00 a share.

Financial Metrics and Outlook

  • Total Return: UNH’s total return over the past month and three months decreased -4.47% and increased +2.81%, respectively, while the year-to-date total return declined -7.04%. This indicates short-term volatility but hints at a recovery from previous market losses.
  • Free Cash Flow per Share (Last 12 Months): UNH has a robust free cash flow per share of $41.20, indicating the company’s ability to generate substantial cash from its operations.
  • Beta: With UNH’s beta of 0.24, the stock is relatively less volatile than the overall market, which appeals to risk-averse Maverick Investors seeking stability.

Analyst Consensus and Ratings

The consensus among analysts is overwhelmingly positive, with 7 Strong Buy, 16 Buy, 3 Hold, and zero Sell ratings, resulting in an overall Strong Buy recommendation. The high rating of 4.50 out of 5.00 in the Maverick-10 stock portfolio is the highest of the ten stocks, further reflecting the positive sentiment.

Conclusion and Considerations

UnitedHealth Group continues to demonstrate strong financial performance, with revenue growth driven by its diversified business segments. The company’s ability to manage rising costs and navigate challenges, such as the impact of the pandemic, showcases its resilience. UNH’s positive outlook, solid earnings predictability, and confidence in raising its earnings guidance indicate a well-positioned company.

Maverick Investors should consider UNH’s defensive attributes, especially in uncertain economic times, and its ability to weather challenges. The relatively low beta and strong cash flow generation add to its appeal. However, the stock’s defensive traits are its most appealing aspect. Its capital appreciation potential over the next few years is subpar, but the Total Return over 10 years has been a whopping +685.85%, which is about +23.2% average annual total performance. That 10-year performance is the third highest in the Dow 30, which is why UNH is in the Maverick Investor portfolio.

10-year Chart of UNH


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