Is UnitedHealth Group Inc (UNH) Stock Trading Below Fair Value?
Investors Observer gives UnitedHealth Group Inc (UNH) a strong evaluation score of 70 based on its analysis. The proprietary rating system takes into account the underlying health of a company by analyzing its stock price, earnings and rate of growth. UNH currently holds a better value than 70% of the shares based on these metrics. Long-term buy and hold investors should find the most relevant valuation ranking system when making investment decisions.
UNH has a 12-month rolling price / earnings (PE) ratio of 22.8. The historical average of around 15 shows a low value for UNH shares as investors pay higher share prices relative to the company’s earnings. UNH’s high PE ratio shows that the company has recently traded above its fair market value. Its 12-month rolling earnings per share (EPS) of 17.59 does not justify the current share price. However, leakage PE ratios do not take into account the company’s projected growth rate, so many newer companies have high PE ratios due to high growth potential attracting investors despite insufficient profits.
The 12-month PEG to Growth Ratio (PEG) of UNH of 1.62 is considered mediocre because the market overstates UNH relative to the expected growth in the company’s earnings. UNH’s PEG is derived from its forward price / earnings ratio divided by its growth rate. A PEG ratio of 1 represents a perfect correlation between earnings growth and the stock price. Due to their integration of more fundamentals of the overall health of a company and their focus on the future rather than the past, PEG ratios are one of the most widely used valuation metrics by analysts today. ‘hui.
UNH ‘has a low valuation at its current price due to an overvalued PEG ratio despite strong growth. UNH’s PE and PEG are below the market average, resulting in a below-average valuation score.
Click here for the full UnitedHealth Group Inc (UNH) Stock Valuation Report.