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UnitedHealth Group (UNH) Gains But Lags Market: What You Should Know

Zacks Equity Research

In the latest trading session, UnitedHealth Group (UNH) closed at $289.76, marking a +1% move from the previous day. This move lagged the S&P 500's daily gain of 1.47%. Meanwhile, the Dow gained 2.32%, and the Nasdaq, a tech-heavy index, added 1.2%.

Prior to today's trading, shares of the largest U.S. health insurer had lost 5.62% over the past month. This has lagged the Medical sector's loss of 0.38% and the S&P 500's gain of 0.74% in that time.

Wall Street will be looking for positivity from UNH as it approaches its next earnings report date. On that day, UNH is projected to report earnings of $4.96 per share, which would represent year-over-year growth of 37.78%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $63.96 billion, up 5.55% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $16.24 per share and revenue of $259.10 billion, which would represent changes of +7.48% and +7%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for UNH. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. UNH is currently sporting a Zacks Rank of #4 (Sell).

Looking at its valuation, UNH is holding a Forward P/E ratio of 17.66. Its industry sports an average Forward P/E of 15.48, so we one might conclude that UNH is trading at a premium comparatively.

We can also see that UNH currently has a PEG ratio of 1.41. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Medical - HMOs industry currently had an average PEG ratio of 1.23 as of yesterday's close.

The Medical - HMOs industry is part of the Medical sector. This group has a Zacks Industry Rank of 166, putting it in the bottom 35% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow UNH in the coming trading sessions, be sure to utilize Zacks.com.


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