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4 Reasons Why WellCare Health Stock is a Great Pick Now

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Leading managed care company WellCare Health Plans, Inc.WCG remains on the growth track supported by prudent strategies. The Florida-based company has been strengthening its revenue-base consistently over the last 10 years. The Affordable Care Act (ACA) implemented by former U.S. President Barrack Obama also contributed to top-line growth.

However, matters might take a turn for the worse for the insurer now. President Donald Trump's decision to repeal and replace ACA to completely reform the U.S. Healthcare industry mightlead to a steep decline in Medicaid programsenrollment. Along with other health insurers like Humana Inc. HUM , UnitedHealth Group, Inc. UNH and Molina Healthcare, Inc. MOH , WellCare is likely to witness a pressure on its top line.

In spite of the possibility of the reform affecting WellCare Health's business, the company remains an attractive pick for investors. Here's why.

Favorable Share Price Movement

Shares of WellCare Healthhave been performing well. Over the last one year, the stock has gained 94.9%, while the Zacks categorized Health Maintenance Organization (HMO) industry registered 24.8% increase. This reflects the company's business strength.

Fundamental Growth

WellCare Health has been growing inorganically via strategic acquisitions, partnerships and alliances over last three years. These initiatives have not only helped it bolster its presence in existing markets, but also have contributed significantly to the geographical expansion of its operations. Since 2011, revenues have increased at a four-year CAGR of 22.5%. The company's healthy balance sheet, mainly backed by its commendable liquidity, has helped it in enhancing shareholders' value through several capital deployment initiatives.

Undervalued Against the Peers

WellCare Health boasts strong key value statistics. It has a P/S (Price to Sales) ratio of 0.41, which is lower than the industry average of 0.46. The company also has a P/CF (Price to Cashflow) ratio of 4.64, whereas the industry average is 5.00. These metrics strengthen the company's potential as a value stock.

VGM Score

WellCare Health has a VGM Score of 'A'. Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics. In fact, our research shows that stocks with VGM Scores of 'A' or 'B' when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) make solid investment choices.

Zacks Rank

WellCare presently has a Zacks Rank #1 (Strong Buy).You can see the complete list of today's Zacks #1 Rank stocks here.

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Humana Inc. (HUM): Free Stock Analysis Report

Molina Healthcare Inc (MOH): Free Stock Analysis Report

UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report

WellCare Health Plans, Inc. (WCG): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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