High Margins, 11% Discount: Buy Elevance Health Stock Now

Elevance Health (ELV) stock might be a good buy now. Why? Because you get high margins – reflective of pricing power and cash generation capacity – for a discounted price. Companies like this generate consistent, predictable profits and cash flows, which reduce risk and allow capital to be reinvested. The market tends to reward that.

What Is Happening With ELV

ELV is up 7% so far this year, but is actually 11% cheaper based on its P/S (Price-to-Sales) ratio compared to 1 year ago.

Here is what’s going well for the company: Elevance Health reported robust Q3 2025 results, with higher premium yields in its Health Benefits segment contributing to strong revenue. The Carelon division saw substantial expansion from strategic acquisitions, including Granular Insurance and IU Health’s insurance business, and scaled risk-based capabilities. Looking to 2026, the company is strategically exiting lower-margin Medicare Part D plans to focus on higher-margin Medicare Advantage HMOs and dual-eligible offerings. This disciplined approach, alongside a 6.36% year-to-date stock return, reinforces the company’s capacity for sustained profitability.

ELV Has Strong Fundamentals

• Recent Profitability: Nearly 2.5% operating cash flow margin and 0.0% operating margin LTM.
• Long-Term Profitability: About 3.1% operating cash flow margin and 0.0% operating margin last 3-year average.
• Revenue Growth: Elevance Health saw growth of 12.0% LTM and 8.4% last 3-year average, but this is not a growth story
• Available At Discount: At P/S multiple of 0.4, ELV stock is available at a 11% discount vs 1 year ago.

Below is a quick comparison of ELV fundamentals with S&P medians.

*LTM: Last Twelve Months

Don’t Expect A Slam Dunk, Though

While ELV stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. Elv’s stock took a hit of about 67% during the Global Financial Crisis, which is no small drop. In 2018, it still fell roughly 25%, and the Covid sell-off pulled it down around 43%. Even the recent inflation shock saw it drop close to 24%. So, while there are plenty of positives around this name, these dips show it’s not immune when the market turns south. Volatility is part of the picture here. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read ELV Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

If you want more details, read Buy or Sell ELV Stock.

How We Arrived At ELV Stock

ELV piqued our interest because it meets the following criteria:

1. Greater than $10 Bil in market cap
2. High CFO (cash flow from operations) margins or operating margins
3. Meaningfully declined in valuation over the past 1 year

But if ELV doesn’t look good enough to you, here are other stocks that also check all these boxes:

1. Visa (V)
2. T-Mobile US (TMUS)
3. ServiceNow (NOW)

Notably, a portfolio that was built starting 12/31/2016 with stocks that fulfil the criteria above would have performed as follows:

• Average 12-month forward returns of nearly 19%
• 12-month win rate (percentage of picks returning positive) of about 72%

Portfolios Are The Smarter Way To Invest

Individual stocks can soar or tank but one thing matters: staying invested. The right portfolio can help you stay invested, capture upside and mitigate the downside associated with any individual stock.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.