Stock (Symbol) |
UnitedHealth (UNH) |
Stock Price |
$229 |
Sector |
| Healthcare |
Data is as of |
| February 19, 2018 |
Expected to Report |
| Apr 16 |
Company Description |
 UnitedHealth is a health and well-being company. The Company’s business platforms include UnitedHealthcare and Optum. UnitedHealthcare provides health care benefits to various customers and markets. Optum is a health services business serving the health care marketplace, including payers, care providers, employers, Governments, life sciences companies and consumers. UNH has 4 segments: UnitedHealthcare, OptumHealth, OptumInsight and OptumRx. OptumHealth is a health and wellness business serving the physical, emotional and financial needs of individuals. OptumInsight provides technology, operational and consulting services to participants in the health care industry. OptumRx is a pharmacy benefit manager. Purchased Catamaran 3/30/15. Source: Thomson Financial |
Sharek’s Take |
 UnitedHealth (UNH) has gone into healthcare insurance, made it efficient, and branched out into other areas like analytics with its Optum division to cut costs via preventative measures. Optum is an added option when companies purchase UnitedHealth insurance, but organizations can get it without the health insurance attached. Optum — which is around 40% of overall profits — has been disrupting the industry while signing deals and getting business left-and-right. Optum has multiple departments to keep you healthy:
Leaving Obamacare has given UNH a positive catalyst, which helped boost 2017 profits (Obamacare was costing UNH around 4% of profits). Now the company stated it expects 2018 profits of $12.30 to $12.60, well above estimates of $10.83 which were taken last qtr. That’s a 16% pop. UNH is a safe growth stock with a solid Est. LTG of 16% a year. Management just increased the dividend to $3 a year (a heavy dividend) and the yield is 1%. UNH is on a roll — it’s beaten the street, upped estimates, and delivered at least 23% profit growth the last 6 qtrs. And you get all this for just 18x earnings. I see continued growth from this company, and have a 2018 Fair Value of $263 on the stock, which gives it 15% upside from here. |
One Year Chart |
 LAst qtr profit growth clocked in at 23% for the 2nd straight qtr, and beat estimates of 18%. Sales increased 10%. Qtrly profit growth Estimates pushed higher to 23%, 23%, 25% and 25%. With a P/E of 18 this stock isn’t very expensive, especially when the Est. LTG is 16%. |
Fair Value |
 My Fair Value is a P/E of 21, which gives UNH decent upside for the next two. But I want to point out that before this qtr’s bump-up to $12.53, 2018 estimates were $10.28, $10.85 and $10.83 the prior three qtrs. So I don’t think this can be a top-tier growth stock as it has been the last three years. |
Bottom Line |
 UnitedHealth has been one of the stock market’s best stocks the past decade, and this tax break gives the stock fuel for the future. But I have to think profit growth will slow to the teens sometime after 2018, thus I’m reluctant to think the stock is deserving of a 20-plus P/E long-term. Still, this is a quality investment for conservative and moderate investors, one with a solid 16% Est. LTG and a 1% yield. UNH ranks 10th in the Conservative Growth Portfolio Power Rankings and 15th in the Growth Portfolio and Aggressive Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
15 of 39Aggressive Growth Portfolio 15 of 16Conservative Stock Portfolio 10 of 32 |
