Summary

This company has delivered another beat and raise, precisely what it delivered last quarter.

UNH has delivered 16 quarterly EPS beats in a row, though missed revenue estimates twice over the same 16 quarters.

These steady beats show why UNH can continue to deliver dividend growth for investors.

This idea was discussed in more depth with members of my private investing community, Cash Builder Opportunities. Learn More »

Wolterk/iStock Editorial via Getty Images Written by Nick Ackerman

UnitedHealth Group (NYSE: UNH ) is delivering results again . This stock has been providing earnings beats for several years now. Though revenue has come in shy on a couple of occasions, it is still on an impressive run. More impressively, they also guided higher for the full year 2021. That was after they had raised guidance last quarter .

Previously, they were targeting non-GAAP EPS of $18.10 to $18.60 for the year. That was an increase from the original expectation of $17.75 to $18.25. However, now this has been hiked to EPS of $18.65 to $18.90. This is well above where they initially anticipated being, and the anticipated low-end is coming in higher than the previous high-end. This is precisely what we want to see from this dividend growth machine.

I’ve called UNH boring in the past , and it continues to be just that. As a health insurance company, it certainly isn’t in a “growth” field per se. Yet, these sorts of results are certainly exciting. UNH Isn’t Overvalued

The stock is headed higher on the back of these results as well, pushing the shares of the company to right near new all-time highs. Data by YCharts Despite that fact, the company isn’t overly expensive considering the growth it has been delivering. If earnings come in at the midway point, we would see EPS of $18.65. Meaning that the forward P/E ratio would be around 22.72, as shown below. This might be over the current average of the last couple of years. Meaning if you believe in mean reversion, shares could fall further. Data by YCharts What I believe is propping UNH up – and the reason I think it isn’t expensive – is that it is still anticipated to grow EPS quite materially next year. Being that they have a record of beating these estimates, the estimates might be pretty low in this case as well.

We are seeing the median analysts’ estimate of EPS will come in at $21.73 next year. That’s 16.5% over the estimated midpoint figure for 2021 that they provided. 2020 was a bit of a strange year for all companies. However, if we use the 2019 EPS figure of $15.11 for that year, then I believe we can see that type of growth is well within the achievable territory for this stock.

This all just means that the forward P/E is likely lower than what we see above. This would put it much closer to the average P/E ratio we have seen for shares historically. (Source – Seeking Alpha) Driving Continued Growth

All this growth isn’t coming because they are sitting around idle. The leaders of this company have been engaged with acquisitions and further developing their platform. This is via the continued development of technology and AI. Optum is a large part of UNH and is called out as one of the key contributors to their higher guidance. There are several areas of the latest conference call that I’d like to point out that I believe show promise. As a result of the progress at both Optum and UnitedHealthcare, we have increased our 2021 adjusted earnings outlook to a range of 1865 to 1890 per share. We continue to prioritize 3 things Andrew has discussed before which are foundational to the growth of our enterprise. First, unlocking the collaborative potential within Optum and UnitedHealthcare for the benefit of all. Second, further developing our technology in data science platform to aid patient care and experience and to help the system run better. Third, strengthening our consumer experience, capabilities, and values. I’ll briefly highlight a couple of items for you. Besides this continued organic growth that they continue to work on, the company is pending acquisition with Change Healthcare. They are anticipating a close in the first part of 2022. Though it isn’t nailed down, they continue to deal with regulatory requests to get the deal done. Before turning over the call to John, a quick word on our pending combination with Change Healthcare. We continue to […]

source UnitedHealth Group: Delivering Results Again

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