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Last update on 2024-06-05

UnitedHealth Group (UNH) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Detailed Piotroski F-Score analysis for UnitedHealth Group (UNH) in 2023, covering profitability, liquidity, and efficiency. Final score: 7/9.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 7

We're running UnitedHealth Group (UNH) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

UnitedHealth Group (UNH) scored 7 out of 9 on the Piotroski F-Score, indicating a strong financial position. The company has shown consistent profitability with increasing net income and positive operating cash flow over 20 years. Liquidity has improved slightly, and despite a small increase in leverage, their overall financial health remains robust. The company has effectively reduced its outstanding shares and maintained a competitive asset turnover ratio. However, there were minor decreases in Return on Assets (ROA) and gross margin.

Insights for Value Investors Seeking Stable Income

Based on the analysis, UnitedHealth Group (UNH) appears to be a strong and financially stable company. Given their high Piotroski F-Score of 7, which suggests an undervalued investment with strong fundamentals, it's worth considering for investors looking for reliable and growth-oriented stocks. Nonetheless, investors should keep an eye on the small declines in ROA and gross margin to ensure they do not indicate future issues.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of UnitedHealth Group (UNH)

Company has a positive net income?

The criterion examines whether a company’s net income is positive, indicating profitability and operational success.

Historical Net Income of UnitedHealth Group (UNH)

For 2023, UnitedHealth Group (UNH) reported a net income of $22,381,000,000, which is indeed positive. Comparing this number to the historical data provided, there's a clear, consistent trend of growing net income over the past 20 years, peaking in 2023. Starting from a net income of $1,825,000,000 in 2003, this has grown multifold to reach its present value. This steady upward trajectory signifies a robust and healthy financial growth, underpinned by the ability to generate increasing profits year after year. Hence, based on the criterion, UnitedHealth Group scores a full 1 point, highlighting its strong operational and profitability status.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is a metric that indicates the cash a company generates from its regular business activities. It's essential because it shows whether a company can maintain and grow its operations.

Historical Operating Cash Flow of UnitedHealth Group (UNH)

For UnitedHealth Group (UNH), the CFO in 2023 is $29,068,000,000, which is positive. This positive cash flow demonstrates that the company is generating sufficient cash from its core business operations, an excellent sign of financial health and operational efficiency. Over the last 20 years, UnitedHealth Group's CFO has shown a steady upward trend, increasing from $3,003,000,000 in 2003 to $29,068,000,000 in 2023, reflecting strong growth and consistent operational performance. Thus, UNH scores 1 in this Piotroski criterion, indicative of a strong financial position.

Return on Assets (ROA) are growing?

Change in ROA measures the company's ability to generate profit from its assets. An increasing ROA suggests improved efficiency.

Historical change in Return on Assets (ROA) of UnitedHealth Group (UNH)

UnitedHealth Group (UNH) reported a Return on Assets (ROA) of 0.0862 in 2023, a slight decrease from 0.0879 in 2022. This results in a score of 0 for the ROA change criterion in the Piotroski analysis. While the decline in ROA is minor, it denotes a slight reduction in the company's efficiency in generating profit from its assets compared to the prior year. Historical data shows a consistent presence of positive ROA, indicating ongoing profitability, but it is essential to monitor this trend to ensure sustained performance. Furthermore, when compared to the industry median ROA, which decreased significantly over the past 20 years to 0.1124 in 2023, UnitedHealth Group's ROA remains competitive. However, to contribute favorably to the Piotroski F-Score, an improved ROA would have been preferable.

Operating Cashflow are higher than Netincome?

This criterion examines whether a company's operating cash flow exceeds its net income. It's important since operating cash flow represents actual cash generated from business operations, indicating financial health.

Historical accruals of UnitedHealth Group (UNH)

For 2023, UnitedHealth Group (UNH) recorded an operating cash flow of $29.07 billion, compared to a net income of $22.38 billion. Since the operating cash flow is higher than net income, it signals strong cash generation capability, worthy of 1 point in the Piotroski analysis. Historically, UnitedHealth’s operating cash flow has consistently grown, reflecting robust operational performance. From merely $3.00 billion in 2003, it surged to $29.07 billion in 2023. This positive trend, complemented by a proportionately growing net income from $1.83 billion in 2003 to $22.38 billion in 2023, underscores effective cash management and solid profitability. For context, accruals have remained stable around 0.1, indicating minimal earnings manipulation, further affirming the company's financial integrity.

Liquidity of UnitedHealth Group (UNH)

Leverage is declining?

Assessing the change in leverage is crucial since it reflects the company's debt levels relative to its equity. Lower leverage suggests lower financial risk.

Historical leverage of UnitedHealth Group (UNH)

The leverage ratio of UnitedHealth Group (UNH) slightly increased from 0.2129 in 2022 to 0.2219 in 2023, indicating a higher reliance on debt financing. Historically, the leverage ratios from 2012 to 2023 ranged from 0.1959 to 0.2272. The minor increase signals elevated financial risk as the company relies more on borrowed capital, assigning 0 points according to Piotroski's F-score.

Current Ratio is growing?

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations. A higher ratio indicates better short-term financial health.

Historical Current Ratio of UnitedHealth Group (UNH)

For UnitedHealth Group (UNH), the current ratio increased slightly from 0.774 in 2022 to 0.7919 in 2023. Despite this increase, UNH's current ratio remains significantly lower than the industry median of 1.11 in 2023. Over the past 20 years, UNH has consistently maintained a current ratio below the industry median. This trend of gradual increase is a positive sign as it suggests that UNH is improving its short-term liquidity. Adding 1 point for the increase aligns with the Piotroski F-score's criterion for evaluating improvements in liquidity position.

Number of shares not diluted?

Change in Shares Outstanding is a fundamental criterion in the Piotroski Analysis, assessing whether the number of shares has decreased. A reduction in shares can signal management's confidence in the company's future profitability and can increase shareholder value.

Historical outstanding shares of UnitedHealth Group (UNH)

In 2023, UnitedHealth Group (UNH) had 928 million outstanding shares, compared to 934 million in 2022. This indicates a decrease of 6 million shares. This trend is positive for the analysis. Reviewing the broader data, UNH has shown a gradual decrease from 1.23 billion shares in 2003 to 928 million in 2023, highlighting a consistent buyback strategy. Therefore, 1 point is awarded as the outstanding shares decreased, reflecting positively on shareholder value.

Operating of UnitedHealth Group (UNH)

Cross Margin is growing?

Change in Gross Margin evaluates the company's efficiency in generating revenue from its core operations.

Historical gross margin of UnitedHealth Group (UNH)

The Gross Margin for UnitedHealth Group (UNH) slightly decreased from 0.2456 in 2022 to 0.2448 in 2023. Despite this slight decline, it surpasses the 2023 industry median of 0.1124, evidencing UNH's consistent operational efficiency. This decrement highlights the need for enhanced strategies but still showcases robust performance relative to peers.

Asset Turnover Ratio is growing?

Change in Asset Turnover assesses the efficiency of a company in utilizing its assets to generate sales. A rising ratio typically points toward improved usage.

Historical asset turnover ratio of UnitedHealth Group (UNH)

UnitedHealth Group (UNH) has seen an increase in its Asset Turnover ratio from 1.4158 in 2022 to 1.4309 in 2023. This positive change signifies that the company has been more efficient in utilizing its assets to generate sales or revenue over the past year. Historically, the ratio reached its highest at 1.7967 in 2003 and its lowest at 1.2957 in 2005. Over the last 20 years, trends show fluctuations but a general improvement towards recent years. Hence, since the turnover has increased, this earns a score of 1 point in Piotroski Analysis.


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