U.S. Markets closed

UnitedHealth Group Incorporated's (NYSE:UNH) Earnings Grew 9.5%, Did It Beat Long-Term Trend?

Simply Wall St

When UnitedHealth Group Incorporated's (NYSE:UNH) announced its latest earnings (30 June 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were UnitedHealth Group's average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not UNH actually performed well. Below is a quick commentary on how I see UNH has performed.

Check out our latest analysis for UnitedHealth Group

How Well Did UNH Perform?

UNH's trailing twelve-month earnings (from 30 June 2019) of US$13b has increased by 9.5% compared to the previous year.

However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 20%, indicating the rate at which UNH is growing has slowed down. To understand what's happening, let’s take a look at what’s going on with margins and whether the entire industry is experiencing the hit as well.

NYSE:UNH Income Statement, August 2nd 2019

In terms of returns from investment, UnitedHealth Group has invested its equity funds well leading to a 23% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 8.7% exceeds the US Healthcare industry of 5.3%, indicating UnitedHealth Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for UnitedHealth Group’s debt level, has increased over the past 3 years from 16% to 18%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as UnitedHealth Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research UnitedHealth Group to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for UNH’s future growth? Take a look at our free research report of analyst consensus for UNH’s outlook.
  2. Financial Health: Are UNH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.