Have you been paying attention to shares of UnitedHealth GroupUNH ? Shares have been on the move with the stock up 7.3% over the past month. UNH hit a new 52-week high of $251.50 in the previous session. UnitedHealth Group has gained 13.7% since the start of the year compared to the 1.4% move for the Medical sector and the 10.6% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on April 17, 2018, UnitedHealth Group reported EPS of $3.04 versus the Zacks Consensus Estimate of $2.92 while it beat the consensus revenue estimate by 0.6%.
For the current fiscal year, UnitedHealth Group is expected to post earnings of $12.61 per share on $225.14 billion in revenues. This represents a 25.22% change in EPS on a 11.92% change in revenues. For the next fiscal year, the company is expected to earn $14.26 per share on $243.93 billion in revenues. This represents a year-over-year change of 13.05% and 8.35%, respectively.
Valuation Metrics
UnitedHealth Group may be at a 52-week high right now, but what might the future hold for UNH? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
UnitedHealth Group has a Value Score of A. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 19.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 20X versus its peer group's average of 14.4X. Additionally, the stock has a PEG ratio of 1.45. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
UnitedHealth Group Incorporated Price and Consensus
UnitedHealth Group Incorporated Price and Consensus | UnitedHealth Group Incorporated Quote
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, UnitedHealth Group currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 and Style Scores of A or B, it looks as if UnitedHealth Group passes the test. Thus, it seems as though UNH shares could have potential in the weeks and months to come.
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UnitedHealth Group Incorporated (UNH): 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.
