Financial analysis of UnitedHealth Group stock performance

Corporate Finance

UnitedHealth Group Stock

This report will provide insight into the UnitedHealth Group Stock from an investor's perspective. The report will show a financial analysis included with an overview of the company's current health standing. The paper will also provide a summary of the company and their products and services. The key to any intelligent investing strategy lies in the investor knowing what a stock is really worth and also if it is safe to buy, sell or hold. Therefore, since this report is from an investor's perspective, the company's stock and industry will be reviewed so as to present a big picture of where United Health is today and where they want to go in the future.

Over the five past years the UnitedHealth Group stock has been making great progress as analysts consistently consider the group a strong buy option. As can be seen from the two stock splits over the past five years, the company is geared to keep small investors interested in addition to the support they receive from the mutual fund industry as well as other institutions:

Introduction

It is often very tempting for investors to use a company's past performance as the one and only buy, sell or hold indicator and therefore many portfolios are built on only that philosophy. As a rule, it usually matters very little how a stock has done in the past and certainly should not be the only gauge to move investors. A more solid rule to follow would be one that points to the future as opposed to the past. In other words, in most cases it is only important for the investor to predict where the company will be and how they will do in the future as opposed to how good or bad they have done in the past.

Of course there are exceptions and in some cases a company's past and future must be considered before taking the jumping in. UnitedHealth Group Incorporated as a stock is one of those exceptions. This company has a solid past performance and a bright future ahead of it. Historically, the company has done well and that can be demonstrated thought the steady growth and sound profits. But, if the future is the rule of choice, then UnitedHealth Group Inc. is also a good fit. The brand name is well recognized and the future looks extremely promising. This report will attempt to present an insight into UnitedHealth Group Incorporated

Overview

UnitedHealth Group Incorporated focuses being the world's best diversified health and well-being services provider. The company currently serves over fifty million Americans and that number seems as though it will continue to rise. UnitedHealth Group Incorporated is a provider of cost-effective healthcare services and resources. The company has near a half million physicians and almost four thousand hospitals contracted throughout the United States. The company successfully manages near fifty billion dollars in combined healthcare spending for almost two hundred thousand small to midsized employer-customers and other small consumer groups. UnitedHealth Group Incorporated's main focus centers around improving the United States healthcare system by the use of technology and other simplifying administrative tools and components. The objective is to stream line the healthcare delivery system so better informed decisions can be made for both the patients and the medical facilities.

United Health Group has an excellent reputation as a company that organizes, supports and facilitates access to health and well-being services for small to mid-sized employers. The company also supports individuals through a technologically advanced network-based benefit offering system. The company is highly touted by the media:

UnitedHealth Group was ranked No. 3 on the 2003 BusinessWeek 50, a list of the nation's best-performing large public corporations

Fortune magazine (April 14, 2003) ranked UnitedHealth Group No. 63 in the 2003 rankings of the 500 largest U.S. corporations based on 2002 revenues.

Forbes (January 2004) included UnitedHealth Group on its 2004 list of the 400 best big companies in America, based on long- and short-term growth, return on capital and other performance measures.

Fortune magazine (July 21, 2003) ranked UnitedHealth Group No. 167 on its 2003 list of 500 of the world's largest companies, based on revenues

Rankings published in Fortune magazine since 1995 have listed UnitedHealth Group the first or second most admired company in the health care industry

Computerworld magazine (May 6, 2002) listed UnitedHealth Group on its annual list of the 100 Best Places to Work in IT for the ninth consecutive year

Competitors Review from Yahoo Finance

Competitors

DIRECT COMPETITOR COMPARISON

UNH

AET Pvt1

CI

Industry

Market Cap: 38.22B 12.59B N/A 9.10B 2.70B

Employees: 33,000 27,600 150,0001 32,700 3.20K

Rev. Growth (ttm): 6.70% -21.10% N/A 0.30% 11.60%

Revenue (ttm): 29.99B 18.33B 162.80B1 18.81B 3.67B

Gross Margin (ttm): 27.50% N/A N/A N/A 19.78%

EBITDA (ttm): 3.47B N/A N/A N/A 148.33M

Oper. Margins (ttm): 10.53% 8.02% N/A 4.80% 6.88%

Net Income (ttm): 1.98B 929.60M N/A 620.00M 93.00M

EPS (ttm): 3.194 5.804 N/A 4.411 2.02

PE (ttm): 19.27-14.15 N/A 14.63-14.42

PEG (ttm): 0.98 0.86 N/A 1.14 0.98

PS (ttm): 1.29 0.71 N/A 0.49 0.73

AET = Aetna Inc.

Pvt1 =

Blue Cross and Blue Shield Association (privately held)

CI = CIGNA Corp

Industry = Insurance (Accident & Health)

As of 2002

INSURANCE COMPANIES RANKED BY SALES

Company Symbol Price Change Market Cap P/E

ALLIANZ AKTIENG

AZ 10.59 0.47% N/A 25.15

ING GROEP NV

ING 21.28 0.42% N/A 8.92

AMER International GROUP

AIG 71.96 0.22% 187.74B 18.98

AXA

AXA 20.53 0.10% 36.18B 95.93

Nippon Life Insurance Company

Assicurazioni Generali S.p.A.

State Farm Insurance Companies

LEGAL&GENL GRP P

LGGNY.PK 8.65 0.00% N/A N/A

The Dai-ichi Mutual Life Insurance Company

Financial Data from Yahoo Finance

TRADING INFORMATION

Stock Price History

Beta: 0.29

52-Week Change: 36.98%

52-Week Change (relative to S&P500): 12.68%

52-Week High (13-Apr-04): 68.50

52-Week Low (2-May-03): 44.725

50-Day Moving Average: 63.48

200-Day Moving Average: 55.90

Share Statistics

Average Volume (3-month): 2,919,863

Average Volume (10 day): 4,362,000

Shares Outstanding: 620.90M

Float: 391.20M

Held by Insiders: 37.00%

Held by Institutions: 89.73%

Shares Short (as of 7-Apr-04): 11.12M

Daily Volume (as of 7-Apr-04): N/A

Short Ratio (as of 7-Apr-04): 5.09

Short % of Float (as of 7-Apr-04): 2.84%

Shares Short (prior month): 12.67M

Dividends & Splits

Annual Dividend: 0.03

Dividend Yield: 0.05%

Dividend Date: 16-Apr-04

Ex-Dividend Date: 30-Mar-04

Last Split Factor (new per old) 2: 2:1

Last Split Date: 19-Jun-03

PERIOD ENDING 31-Dec-03 31-Dec-02 31-Dec-01

Assets

Current Assets

Cash And Cash Equivalents 2,262,000 1,130,000 1,540,000

Short-Term Investments 486,000 701,000 270,000

Net Receivables 1,014,000 1,224,000 1,172,000

Inventory - 2,069,000 1,903,000

Other Current Assets 2,358,000 50,000 61,000

Total Current Assets 6,120,000 5,174,000 4,946,000

Long-Term Investments 6,729,000 4,498,000 3,888,000

Property Plant and Equipment 1,032,000 955,000 847,000

Goodwill 3,509,000 3,363,000 2,805,000

Intangible Assets 180,000 122,000

Accumulated Amortization

Other Assets 64,000 52,000

Deferred Long-Term Asset Charges

Total Assets 17,634,000 14,164,000 12,486,000

Liabilities

Current Liabilities

Accounts Payable 5,727,000 5,200,000 4,669,000

Short/Current Long-Term Debt 229,000 811,000 684,000

Other Current Liabilities 2,812,000 2,368,000 2,138,000

Total Current Liabilities 8,768,000 8,379,000 7,491,000

Long-Term Debt 1,750,000 950,000 900,000

Other Liabilities 1,517,000

Deferred Long-Term Liability Charges 471,000 407,000 204,000

Minority Interest

Negative Goodwill

Total Liabilities 12,506,000 9,736,000 8,595,000

Stockholders' Equity

Misc Stocks Options Warrants

Redeemable Preferred Stock

Preferred Stock

Common Stock 6,000 3,000 3,000

Retained Earnings 5,064,000 4,252,000 3,849,000

Treasury Stock

Capital Surplus 58,000 173,000 39,000

Other Stockholder Equity

Total Stockholder Equity 5,128,000 4,428,000 3,891,000

Net Tangible Assets $1,439,000 $943,000 $1,086,000

Key Statistics Data provided by Reuters, except where noted. (UnitedHelath Group)

VALUATION MEASURES

Market Cap (intraday): 38.09B

Enterprise Value (30-Apr-04)3: 38.14B

Trailing P/E (ttm, intraday): 19.20

Forward P/E (fye 31-Dec-05)1: 13.88

PEG Ratio (5 yr expected) 1: 0.98

Price/Sales (ttm): 1.29

Price/Book (mrq): 5.02

Enterprise Value/Revenue (ttm)3: 1.27

Enterprise Value/EBITDA (ttm)3: 11

FINANCIAL HIGHLIGHTS

Fiscal Year

Fiscal Year Ends: 31-Dec

Most Recent Quarter (mrq): 31-Mar-04

Profitability

Profit Margin (ttm): 6.59%

Operating Margin (ttm): 10.53%

Management Effectiveness

Return on Assets (ttm): 11.95%

Return on Equity (ttm): 37.68%

Income Statement

Revenue (ttm): 29.99B

Revenue Per Share (ttm): 48.492

Revenue Growth (lfy)3: 6.70%

Gross Profit (ttm)2: 8.11B

EBITDA (ttm): 3.47B

Net Income Avl to Common (ttm): 1.98B

Diluted EPS (ttm): 3.194

Earnings Growth (lfy)3: 48.10%

Balance Sheet

Total Cash (mrq): 2.93B

Total Cash Per Share (mrq): 4.72

Total Debt (mrq)2: 2.40B

Total Debt/Equity (mrq): 0.332

Current Ratio (mrq): 0.705

Book Value Per Share (mrq): 12.396

Cash Flow Statement

From Operations (ttm)3: 2.89B

Free Cashflow (ttm)3: 2.49B

Conclusion

In conclusion, I see the UnitedHealth Group as a strong buy opportunity because they are a historically strong company that also has the added benefit of a potentially great future outlook. This report provided an insight into the UnitedHealth Group stock from an investor's perspective. The report also demonstrated a financial analysis which included an overview of the company's current and historical standing as well as key financial indicators to show the potential growth of the organization. The paper provided a summary of the company and their products and services and also the view of the media. The key to any intelligent investing strategy lies in the investor knowing what a stock is really worth. This report provided that key information.