Is It Time To Buy UnitedHealth Stock?

UnitedHealth’s stock (NYSE:UNH) has experienced a significant decline, falling from a high of approximately $600 in April to around $275 in May, before recovering slightly to $325. This downturn primarily followed the company’s release of disappointing Q1 results, the subsequent withdrawal of its earnings outlook, and sudden changes in top management. While these events have understandably raised concerns about UNH stock, it’s also trading at very attractive valuations. Furthermore, as detailed below, the company demonstrates strong operating performance and financial health across key parameters such as Growth, Profitability, Financial Stability, and Downturn Resilience. However, for investors who seek lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative — having outperformed the S&P 500 and generated returns exceeding 91% since its inception. Separately, see – SOFI Stock To $30?

How Does UnitedHealth’s Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, UNH stock looks cheap compared to the broader market.

• UnitedHealth has a price-to-sales (P/S) ratio of 0.7 vs. a figure of 3.1 for the S&P 500
• Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 11.4 compared to 20.9 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 12.9 vs. the benchmark’s 26.9

How Have UnitedHealth’s Revenues Grown Over Recent Years?

UnitedHealth’s Revenues have seen notable growth over recent years.

• UnitedHealth has seen its top line grow at an average rate of 11.3% over the last 3 years (vs. increase of 5.5% for S&P 500)
• Its revenues have grown 8.1% from $379 Bil to $410 Bil in the last 12 months (vs. growth of 5.5% for S&P 500)
• Also, its quarterly revenues grew 9.8% to $110 Bil in the most recent quarter from $100 Bil a year ago (vs. 4.8% improvement for S&P 500)

How Profitable Is UnitedHealth?

UnitedHealth’s profit margins are much worse than most companies in the Trefis coverage universe.

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• UnitedHealth’s Operating Income over the last four quarters was $33 Bil, which represents a poor Operating Margin of 8.2%
• UnitedHealth’s Operating Cash Flow (OCF) over this period was $29 Bil, pointing to a poor OCF Margin of 7.0% (vs. 14.9% for S&P 500)
• For the last four-quarter period, UnitedHealth’s Net Income was $22 Bil – indicating a poor Net Income Margin of 5.4% (vs. 11.6% for S&P 500)

Does UnitedHealth Look Financially Stable?

UnitedHealth’s balance sheet looks strong.

• UnitedHealth’s Debt figure was $81 Bil at the end of the most recent quarter, while its market capitalization is $297 Bil (as of 7/1/2025). This implies a moderate Debt-to-Equity Ratio of 28.6% (vs. 19.4% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $34 Bil of the $310 Bil in Total Assets for UnitedHealth.  This yields a strong Cash-to-Assets Ratio of 11.1%

How Resilient Is UNH Stock During A Downturn?

UNH stock has been more resilient than the benchmark S&P 500 index during some of the recent downturns. As investors hope for a soft landing in the U.S. economy, how severe could it become if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks performed during and after previous market crashes.

Inflation Shock (2022)

• UNH stock fell 19.3% from a high of $555.15 on 31 October 2022 to $447.75 on 13 July 2023, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 17 July 2024
• Since then, the stock has increased to a high of $625.25 on 11 November 2024 and currently trades at around $330

COVID-19 Pandemic (2020)

• UNH stock fell 36.2% from a high of $305.31 on 19 February 2020 to $194.86 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 1 June 2020

Global Financial Crisis (2008)

• UNH stock fell 72.4% from a high of $58.99 on 21 December 2007 to $16.30 on 20 November 2008, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 2 April 2012

Putting All The Pieces Together: What It Means For UNH Stock

In summary, UnitedHealth’s performance across the parameters detailed above are as follows:

• Growth: Very Strong
• Profitability: Very Weak
• Financial Stability: Strong
• Downturn Resilience: Strong
• Overall: Strong

UnitedHealth has demonstrated strong performance across the aforementioned parameters. This, combined with its current low valuation, makes the stock appear attractive and supports our conclusion that UNH is a good buying opportunity.

Naturally, there’s always a degree of uncertainty. Given the recent setbacks, including Centene’s recent withdrawal of guidance, investors might be hesitant to pick UNH. However, for long-term investors, the current discounted valuation is likely to be advantageous, especially considering the company’s consistent history of solid performance.

While UNH stock looks promising, investing in a single stock can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. 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.

 

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