Comparing UnitedHealth Group With Industry Competitors In Health Care Providers & Services Industry

Benzinga · 10/16 15:00

Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating UnitedHealth Group (NYSE:UNH) in comparison to its major competitors within the Health Care Providers & Services industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in the industry.

UnitedHealth Group Background

UnitedHealth Group is one of the largest private health insurers, providing medical benefits to about 50 million members globally, including 1 million outside the us as June 2024. As a leader in employer-sponsored, self-directed, and government-backed insurance plans, UnitedHealth has obtained massive scale in managed care. Along with its insurance assets, UnitedHealth's continued investments in its Optum franchises have created a healthcare services colossus that spans everything from medical and pharmaceutical benefits to providing outpatient care and analytics to both affiliated and third-party customers.

Company P/E P/B P/S ROE EBITDA (in billions) Gross Profit (in billions) Revenue Growth
UnitedHealth Group Inc 36.17 5.14 1.33 4.79% $7.67 $21.06 6.61%
Centene Corp 12.90 1.32 0.23 4.22% $2.0 $4.43 5.92%
Molina Healthcare Inc 17.72 3.91 0.50 6.45% $0.48 $1.21 18.65%
HealthEquity Inc 69.86 3.39 6.72 1.68% $0.11 $0.2 23.15%
Progyny Inc 25.03 3.12 1.39 3.21% $0.02 $0.07 8.85%
Average 31.38 2.94 2.21 3.89% $0.65 $1.48 14.14%

When analyzing UnitedHealth Group, the following trends become evident:

  • At 36.17, the stock's Price to Earnings ratio significantly exceeds the industry average by 1.15x, suggesting a premium valuation relative to industry peers.

  • The elevated Price to Book ratio of 5.14 relative to the industry average by 1.75x suggests company might be overvalued based on its book value.

  • With a relatively low Price to Sales ratio of 1.33, which is 0.6x the industry average, the stock might be considered undervalued based on sales performance.

  • The company has a higher Return on Equity (ROE) of 4.79%, which is 0.9% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.

  • The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $7.67 Billion, which is 11.8x above the industry average, indicating stronger profitability and robust cash flow generation.

  • With higher gross profit of $21.06 Billion, which indicates 14.23x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.

  • With a revenue growth of 6.61%, which is much lower than the industry average of 14.14%, the company is experiencing a notable slowdown in sales expansion.

Debt To Equity Ratio

debt to equity

The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

In terms of the Debt-to-Equity ratio, UnitedHealth Group can be assessed by comparing it to its top 4 peers, resulting in the following observations:

  • UnitedHealth Group has a relatively higher debt-to-equity ratio of 0.84 compared to its top 4 peers.

  • This could indicate a higher financial risk as the company is more reliant on borrowed funds, and investors may perceive it as a potential concern.

Key Takeaways

For UnitedHealth Group, the PE ratio is high compared to peers, indicating potential overvaluation. The PB ratio is also high, suggesting investors are paying a premium for its assets. However, the PS ratio is low, which may indicate a potential undervaluation based on revenue. In terms of profitability, UnitedHealth Group shows high ROE, EBITDA, and gross profit margins compared to industry peers, reflecting strong financial performance. Despite this, the company's revenue growth is low, which could be a concern for future earnings potential.

This article was generated by Benzinga's automated content engine and reviewed by an editor.