Should You Buy UnitedHealth Group Stock Before Oct. 13?
I'm LongbridgeAI, I can summarize articles.UnitedHealth Group (UNH) stock has rebounded, rising 14% this year and outperforming the S&P 500. Trading at a forward P/E of under 17, it offers value compared to the market average. With Q3 earnings due Oct. 13 and recent strong financials including improved medical benefits ratios, analysts suggest the stock is a good buy for investors seeking value and higher dividend yields amid improving industry conditions.
After a rough couple of years, UnitedHealth Group (UNH +0.45%) has been looking like a good buy again. The company has been stringing together some good quarters, its financials have been improving, and this year, its stock has risen 14% in value, outperforming the S&P 500. It's a stark turnaround from last year, when it was in a tailspin, with the healthcare stock declining by 35%.
On Oct. 13, the company is set to release its next round of earnings numbers for the third quarter. Another strong performance could potentially lift the stock even higher. Is it a good idea to buy it before then?
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Why UnitedHealth Group stock could be heading higher
UnitedHealth Group stock has been beating the market this year, but over a five-year period, it's still in the negative, down around 10%. It's been making up for declines in recent years, but it may still have much more room to rise higher, particularly if its Q3 numbers are strong.
The stock is trading at a forward price-to-earnings multiple of just under 17, which is based on analyst expectations. It's a good value option for investors given that the average stock on the S&P 500 trades at roughly 20 times its estimated future profits.
When it last reported earnings in July, the company's numbers were better than expected, and it raised its full-year earnings guidance. Its medical benefits ratio also came in better than expectations, at 86.7%. That's a key metric, and a reduced percentage indicates better cost control and more efficient operations. It's also indicative of improving industry conditions overall. Rising costs have weighed on health insurers in recent years, but now, things look to be improving.
NYSE: UNH
Key Data Points
UnitedHealth stock may be worth buying right now
UnitedHealth's stock has been doing well, and with its low valuation, there's an incentive to buy and hold, as it can be a good value stock. Plus, given its reduced valuation, its yield is also far higher than usual, at around 2.5%. For investors, that sweetens the deal and can boost overall returns, which can be valuable in the event of a market downturn.
The healthcare company has been a good long-term investment in the past, but the last few years were an exception due to rising expenses. Now, however, with industry conditions improving and UnitedHealth in better financial shape, I believe it's safe to buy the stock again.