Molina Healthcare Stock Fell 27% in a Month, What Now?

Molina Healthcare (MOH) stock is down 27.2% in 21 trading days. Already own the stock? You might want to consider holding it. Planning to buy? This might be your opportunity. Consider the following data:

• Size: Molina Healthcare is a $7.7 Bil company with $45 Bil in revenue currently trading at $147.03.
• Fundamentals: Last 12 month revenue growth of 13.7% and operating margin of 3.0%.
• Liquidity: Has Debt to Equity ratio of 0.5 and Cash to Assets ratio of 0.54
• Valuation: Molina Healthcare stock is currently trading at P/E multiple of 8.7 and P/EBIT multiple of 5.8
• Has returned (median) 27.6% within a year following sharp dips since 2010. See MOH Dip Buy Analysis.

While we like to buy dips if the fundamentals check out – for MOH, see Buy or Sell MOH Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and MOH drops another 20-30% to $103 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience. Turns out, the stock saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

A single stock can be risky, but there is a huge value to a broader, diversified approach we take with the Trefis High Quality Portfolio. We go beyond just equities. Is a portfolio of 10% commodities, 10% gold, and 2% crypto in addition to equities and bonds likely to return more during the next 1-3 years, and protect you better if markets crash 20%? We have crunched the numbers.

Below are the details, but before that, as a quick background: MOH provides managed health care services to low-income families and individuals through Medicaid, Medicare, and government programs across 18 states, serving over 5 million members.

2022 Inflation Shock

• MOH stock fell 29.4% from a high of $369.23 on 26 October 2022 to $260.64 on 15 March 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 12 December 2023
• Since then, the stock increased to a high of $419.53 on 19 March 2024 , and currently trades at $147.03

 
2020 Covid Pandemic

• MOH stock fell 29.9% from a high of $153.84 on 19 February 2020 to $107.79 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 8 April 2020

 
2018 Correction

• MOH stock fell 30.8% from a high of $155.28 on 6 June 2019 to $107.47 on 27 September 2019 vs. a peak-to-trough decline of 19.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 8 April 2020

 
2008 Global Financial Crisis

• MOH stock fell 59.0% from a high of $27.22 on 24 December 2007 to $11.17 on 12 December 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 4 April 2011

 
It is a good thing to keep in mind how low MOH could go during a downturn. And you should also check how the stock fared when compared with 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.