UnitedHealth Group Incorporated (NYSE: UNH)
With a market capitalization of $483 billion, UnitedHealth Group is the biggest health insurer in the world. It's a two-headed business consisting of UnitedHealthcare, which offers health insurance, and Optum, a healthcare solutions segment that provides pharmacy, services, and care access to patients. The company was founded in 1977 and has its headquarters in Minnesota, United States of America. The company has recently faired super well finishing on top of the Dow which led to an increase in mentions by a massive 200% over the last day, encouraging investors to wonder what makes the stock so highly hyped. Currently, shares of UnitedHealth Group trade at $529 per share.
Positive Hype
There’s an abundance of reasons why you should consider adding UnitedHealth to your portfolio, here are some of them.
UnitedHealth Group has generated a trailing-12-months revenue of a whopping $295 billion. The company's grown its revenue by an annual average of 11% and earnings-per-share by 14% over the past decade.
The company also saw premiums revenue rise more than 15% year over year and total revenue jump more than 14% over the same time frame.
UnitedHealth Group finished atop the Dow, with shares gaining nearly 5.5%. The company reported earnings that beat analyst estimates and also raised its full-year guidance.
Thanks to an unmatched scale and a positive industry outlook, analysts are predicting the company will produce 14.6% annual earnings growth over the next five years.
This strong growth potential explains why UnitedHealth's board of directors was confident enough to announce a 13.8% increase in its quarterly dividend per share to $1.65 last month. The company’s dividend payout ratio sits at just about 30%.
It is a solid dividend stock with 13 consecutive raises and enough share repurchases to lower the share count by 9% over the past 10 years. Its dividend currently yields close to 1.3%.
Global Market Insights believes that the global health insurance market will grow 4.6% each year, from $2.8 trillion in 2020 to $3.9 trillion by 2027.
But the biggest opportunity for UnitedHealth Group lies with its Optum business since it is expanding into new areas by making acquisitions that could make Optum a leader in the home healthcare market.
Negative Hype
Although UnitedHealth has recently seen huge successes in terms of performance, there are still some reasons it might not be the best time to invest in the company. Here are two of them.
On a post-earnings call with investors, CFO John Rex cautioned that there could be an impact from "rising COVID-related hospital admissions," meaning that the trends fueling the higher earnings could be very short-term.
UnitedHealth shares are not very cheap, trading at $529 per share right now.
Conclusion
UnitedHealth Group's stable underlying business is appealing to investors during times of uncertainty because the company is able to relatively easily pass along higher costs to customers. However, there is still a small chance that rising costs and inflation affect the company negatively in the near future. That being said, the stock's forward price-to-earnings (P/E) ratio of 20.9 is sensible for its low-teens-percentage annual earnings growth forecast over the medium term making it a stock to consider in any case.
HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.
The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.
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