Metrics Agree with UnitedHealth’s Consensus By TipRanks
United Health Group Incorporated (UNH) operates a diversified health care company in the United States.
J.P. Morgan put the stock recently on its 15 vintage value list. My opinion is bullish. (See UNH stock charts on TipRanks)
UnitedHealth (NYSE:)’s growth continues, with year-over-year revenue growing by 14.8% in Q2. UnitedHealth’s phenomenal performance can be attributed to its Optum and United segment, with their respective revenues growing by 17.2% and 13%.
UnitedHealth is expected to continue its strong performance over the next twelve months thanks to the staggering amount of cash it has from operations ($20.8 billion). This liquidity drives growth and permits for share buybacks, dividends, and acquisitions.
UnitedHealth will also benefit from its direct-to-consumer strategy via OptumStore, which is set to rival His & Hers Health.
Pricing Metrics, Valuation, Shareholder Compensation
If we observe UNH’s weighted average cost of capital of 5.4%, we can conclude that investors are confident in the firm’s ability to produce residual after debt repayments.
Based on the company’s P/E ratios and EBIT ratios, United Health trades at an attractive discount to its industry. In addition, the company’s EPS is expected to grow another 11.2% by December, meaning that a $498 price is reachable based on its justified forward PE.
You’ll find income and potential capital gains here if you are looking for income. United Health has increased its dividend payout for 12 straight years.
Wall Street’s Take & Conclusion
Wall Street thinks UnitedHealth stock is a Strong Buy, with 15 Buy ratings, one Hold rating, and no Sell ratings assigned in the past three months. A UNH average price target of $465.75 suggests 10.8% upside potential.
J.P. Morgan included United Health in its August vintage value stocks listing.
Its price and valuation both point to significant upside. Although United Health may not be a great dividend stock, it is a solid dividend investment if you are looking for income and capital gains.
Disclosure: Steve Gray Booyens had no position at the time this article was published.
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