Strong Cash Yield: Is Elevance Health Stock A Buy?

Elevance Health (ELV) could be a good pick for your portfolio, with its high cash yield, good fundamentals, and discounted valuation. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market

What Is Happening With ELV

ELV stock is currently trading at P/S (Price-to-Sales) ratio that is at a meaningful discount to its 3-month and 2-year highs, and also below its 3-year average.

The stock may not reflect it yet, but here is what’s going well for the company. Elevance Health saw its Carelon segment’s Q4 2025 operating revenue increase 27%, driven by CarelonRx and the CareBridge acquisition. While total membership decreased due to Medicaid attrition, the company is strategically exiting lower-margin Medicare Advantage plans and increasing ACA premiums by 20-30% for improved 2026 profitability. Management targets a return to at least 12% adjusted EPS growth by 2027.

ELV Has Good Fundamentals

• Good Cash Yield: Not many stocks offer free cash flow yield of 5.1%, but Elevance Health stock does
• Strong Margin: Last 12 month operating margin of 0.0%
• Growth: Last 12 revenue growth of 12.0% – low growth, but this selection is all about high yield and margin
• Valuation: ELV stock currently trading at 39% below 2Y high, 13% below 1M high, and at a PS lower than 3Y average.

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

*LTM: Last Twelve Months

But What Is The Risk Involved?

While ELV stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. ELV fell roughly 67% in the Global Financial Crisis, took a 43% hit during the Covid pandemic, and dropped about 25% in both the 2018 correction and the recent inflation shock. Even the less severe downturns still carved out losses north of 20%. Solid fundamentals matter, but when the market turns, ELV’s history shows it’s not immune to sharp pullbacks. 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.

For more details and our view, see Buy or Sell ELV Stock.

Stocks Like ELV

Not ready to act on ELV? Consider these alternatives:

1. Accenture (ACN)
2. Paychex (PAYX)
3. Lululemon Athletica (LULU)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. Dipped last month & meaningfully below 2Y high
3. Current P/S < last few year average
4. Strong operating margin with no instances of large margin collapse
5. High free cash flow yield

A portfolio of stocks with the criteria above would have performed has follows since 12/31/2016:

• Average 6-month and 12-month forward returns of 10.4% and 20.4% respectively
• Win rate (percentage of picks returning positive) of about 74% for 12-month period
• Strategy consistent across market cycles

Multi Asset Portfolios Offer More Upside With Less Risk

Individual picks are volatile but diversified assets offset each other. A multi asset portfolio helps you stay the course capture upside and reduce downside.

The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which 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