Yahoo Finance UnitedHealth Group Incorporated (NYSE:UNH): Has Recent Earnings Growth Beaten Long-Term Trend?
When UnitedHealth Group Incorporated (NYSE:UNH) announced its most recent earnings (30 June 2018), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how UnitedHealth Group performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see UNH has performed.
See our latest analysis for UnitedHealth Group
Could UNH beat the long-term trend and outperform its industry?
UNH’s trailing twelve-month earnings (from 30 June 2018) of US$11.9b has jumped 46% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 16%, indicating the rate at which UNH is growing has accelerated. How has it been able to do this? Well, let’s take a look at whether it is solely due to an industry uplift, or if UnitedHealth Group has seen some company-specific growth.
In terms of returns from investment, UnitedHealth Group has invested its equity funds well leading to a 23% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 8.5% exceeds the US Healthcare industry of 6.7%, indicating UnitedHealth Group has used its assets more efficiently. However, its return on capital (ROC), which also accounts for UnitedHealth Group’s debt level, has declined over the past 3 years from 19% to 16%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 52% to 67% over the past 5 years.
What does this mean?
UnitedHealth Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as UnitedHealth Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research UnitedHealth Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for UNH’s future growth? Take a look at our free research report of analyst consensus for UNH’s outlook.
Financial Health: Are UNH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
