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UnitedHealth (UNH) shares have dropped 10% over the last week and are presently trading at $330.83. We believe there are only a few aspects to be wary of in UNH stock, considering its overall Moderate operating performance and financial health. This corresponds with the stock's Moderate valuation, leading us to conclude that it is Fairly Priced. Over the past several months, UNH has been under pressure despite being a major player in U.S. healthcare. The company reported that its second quarter of 2025 missed earnings expectations, which rattled investor confidence. One of the key culprits: rapidly rising medical-care costs, especially within its Medicare Advantage business, which eroded margins more than anticipated. On the flip side, UNH delivered solid third-quarter revenue growth of 12% year-over-year, and raised its full-year 2025 earnings outlook, which is a positive signal. But the good news is tempered by residual worries around cost trends, regulatory and competitive risks, and whether the elevated cost pressures can be sustainably managed. Here is our evaluation: CONCLUSION Stocks can experience volatility, but markets are also subject to fluctuation – see 2008, 2020. Volatility occurs. Check Trefis’ Boston-based wealth management partner‘s allocation framework for both scenarios. MORE FOR YOU Let’s delve into the details of each of the factors assessed, but first, for some quick background: With $300 Bil in market capitalization, UnitedHealth offers a variety of healthcare services, which include consumer health benefit plans and pharmacy care programs such as retail network contracting, home delivery, specialty pharmacy, and clinical services. [1] Valuation Appears Moderate This table shows how UNH's valuation compares to the broader market. For further details, see: UNH Valuation Ratios [2] Growth Is Robust UnitedHealth's top line has reported an average growth rate of 11.4% over the last 3 years Its revenues have increased by 10%, from $394 Bil to $435 Bil in the previous 12 months Additionally, its quarterly revenues rose by 12.2% to $113 Bil in the latest quarter, up from $101 Bil a year earlier. This table illustrates how UNH's growth compares to the broader market. For more details, see: UNH Revenue Comparison [3] Profitability Seems Very Weak UNH's operating income for the last 12 months was $26 Bil, indicating an operating margin of 6.1% With a cash flow margin of 4.8%, it produced nearly $21 Bil in operating cash flow during this time frame Over the same period, UNH recorded approximately $18 Bil in net income, resulting in a net margin of around 4.0% This table highlights UNH's profitability relative to the broader market. For additional details, see: UNH Operating Income Comparison [4] Financial Stability Is Strong UNH had a debt of $80 Bil at the conclusion of the latest quarter, while its current Market Cap stands at $300 Bil. This results in a Debt-to-Equity Ratio of 27.0% UNH Cash (including cash equivalents) constitutes $31 Bil of $315 Bil in total Assets. This results in a Cash-to-Assets Ratio of 9.7% [5] Resilience During Economic Downturns Is High UNH has demonstrated greater resilience than the S&P 500 index amid various economic downturns. We evaluate this by examining both (a) the extent of the stock's decline and (b) the speed of its recovery. 2022 Inflation Shock UNH stock decreased by 19.3% from a peak of $555.15 on 31 October 2022 to $447.75 on 13 July 2023, compared to a peak-to-trough drop of 25.4% for the S&P 500. Nevertheless, the stock managed to completely recover to its pre-Crisis peak by 17 July 2024 Since that time, the stock has risen to a peak of $625.25 on 11 November 2024 and is currently trading at $330.83 2020 Covid Pandemic UNH stock dropped 36.2% from a peak of $305.31 on 19 February 2020 to $194.86 on 23 March 2020, while the S&P 500 saw a peak-to-trough decline of 33.9%. However, the stock completely recovered to its pre-Crisis peak by 1 June 2020 2008 Global Financial Crisis UNH stock declined by 72.4% from a peak of $58.99 on 21 December 2007 to $16.30 on 20 November 2008, compared to a peak-to-trough decline of 56.8% for the S&P 500. Nonetheless, the stock managed to fully recover to its pre-Crisis peak by 2 April 2012 However, the risk extends beyond significant market crashes. Stocks can decline even in good market conditions – consider earnings reports, business updates, and changes in outlook. Read UNH Dip Buyer Analyses to explore how the stock has bounced back from sharp drops in the past. The Trefis High Quality (HQ) Portfolio, which includes a selection of 30 stocks, has consistently outperformed its benchmark, incorporating all three - S&P 500, Russell, and S&P mid-cap. What accounts for this success? In aggregate, HQ Portfolio stocks have delivered superior returns with reduced risk compared to the benchmark index; offering a smoother ride, as shown in HQ Portfolio performance metrics.
