United Health Services Inc. (UHS - Free Report) owns and operates outpatient facilities, acute care hospitals plus behavioral healthcare facilities along with its subsidiaries.
The company flaunts a favorable VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
Shares of this Zacks Rank #3 (Hold) stock have inched up 1.35% in the past year, underperforming the industry’s growth of 13.12%.
Now, let’s focus on some important points that make United Health Services stock an investor favorite.
Increasing Top Line: United Health Services has been witnessing steady revenue growth since 2013, riding high on the strength of solid inorganic growth as well as strong segmental performances, namely Acute Care and Behavioral Health. The company is expected to retain its revenue momentum in the future as well, backed by a robust performance across all its segments.
Strong Performance of the Acute-Care Segment: The company has been experiencing a sturdy rise in this segment since 2012. Acute care mainly focuses on providing short-term healthcare to patients requiring urgent attention. Under this segment, the average number of licensed beds in the hospitals has been increasing, boosting the company’s revenues in turn. In 2017, net revenues earned from this segment improved 4.7% year over year. Last reported quarter, the trend continued with 4% improvement.
Solid Performance of the Behavioral Segment: Focusing on treating patients with eating disorders, sexual trauma, disorderliness and autism, the Behavioral platform has witnessed a spurt in the number of licensed beds since 2012. This has favored the top line, nudging it up 1.7% year over year in 2017. In first-quarter 2018 as well, the segment rose 3%. Sound acquisitions in this segment have also led to growth in the addiction and mental health disorder market. The segment is likely to grow in the upcoming quarters as well, backed by the new laws.
Underpriced: Shares of United Health Services are undervalued at the moment, which is a highly attractive proposition for investors. The company has a trailing 12-month price-to-equity ratio of 14.53, falling below the industry’s average of 15.07.
Price Performance: In a year’s time, shares of the company have gained 1.35%, comparing unfavorably with the industry’s rise of 13.12%. However, the strong fundamentals are anticipated to drive the stock higher in the upcoming quarters.
Acquisitions: The company’s buyout of adult services division of Cambian group in 2016 is assumed to expand the company’s presence in the U.K. along with its market presence in Nevada, courtesy of the Desert View Hospital purchase. The company is projected to widen its international base with more such integrations in the future.
Profitability: The return-on-equity (ROE) of the company stands at 15.2%, comparing favorably with the industry average of (193.1)%, thereby underlying the stock’s growth potential. This also shows the company’s efficient usage of its shareholders’ funds.
Growth Projections: The Zacks Consensus Estimate for current-year earnings per share is pegged at $9.41, representing a year-over-year increase of 24.97% on 4.42% higher revenues of $10.87 billion.
For 2019, the consensus estimate for earnings per share stands at $10.20 on revenues of $11.4 billion, translating into a respective 8.46% and 5.15% year-over-year rise.
Stocks to Consider
Some better-ranked stocks from the Medical industry are WellCare Health Plans, Inc. (WCG - Free Report) , Anthem, Inc. (ANTM - Free Report) and Humana Inc. (HUM - Free Report) .
WellCare Health offers managed care services for government-sponsored health care programs. The company came up with an average four-quarter positive surprise of 51.70%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Anthem and its subsidiaries offer network based managed care health benefit plans to individuals, small as well as large groups, plus Medicaid and Medicare markets. The company delivered an average four-quarter beat of 7.22% and carries a Zacks Rank #2 (Buy).
Humana Inc. and its units operate as a health and well-being company in the United States. It pulled off an average four-quarter earnings surprise of 6.16% and has a Zacks Rank of 2.
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