The earnings per share of United Health Group, Inc. (NYSE:UNH) for the past 4 quarters consistently beat estimates, and investors are optimistic that UNH will once again beat analysts’ earnings forecast when it announces the latest earnings report on April 19, 2012.
There are mixed estimates from different groups of analysts. The highest estimate is pegged at $1.21 per share, while the lowest estimated amount of earning per share is $1.15. But the average forecast for the first quarter of 2012 is $1.17. All speculations will come to end when the company will finally release the earnings report.
What to Expect:
Wall Street projected the Q1 2012 earnings per share of UNH at $1.16, down by 6 cents from last year’s performance of $1.22 per share during the same period. This is due to increasing medical costs, still relatively high unemployment rate, and some changes in healthcare program.
Despite the odds, UNH still remain strong with excellent 2011 performance brought about by revenue growth, very efficient cash flow, and significant rise in membership. Analysts projected UNH to end the year with another round of solid performance, capable of racking up $109.212 Billion in revenues, with annual earnings per share of $4.72. The projected amount is up by $7.35 Billion from last year’s total at $101.862 when it ended the year 2011.
The projections are backed by the company’s well-diversified business model and its current market position in the healthcare industry, catering to various markets like Medicaid, Medicare, and commercial healthcare programs.
Trends to Watch For:
For the past three quarters, revenues consistently increased from $25.234 in Q2 2011and $25.280 in Q3, to $25.916 in Q4. It is expected to end the first quarter of 2012 with robust revenues of $27.161.
Analyst Ratings:
For the first few months of 2012, analysts’ ratings were steady at strong buy, due to the rising trend from its all time 52-week low of $41.85 last August 10, 2011. It sharply increased in the ensuing months and dived again to another low point of $43.56 last November 23, 2011.
Since then, price index is on upward trend until the first quarter of 2012 where it entered the year at $51.24 and now trading at the range $57 to $59 per share. Some experts speculate that the current price range is already at the resistance level. But if the earnings report will show positive and impressive results, there is greater chance that UNH will break its April 3 52-week all time high price of $59.40.
Competitors:
United Health Group is a Minnesota-based company that is currently serving the healthcare needs of about 70 million Americans. Its major competitors in the healthcare industry are Aetna Inc. (NYSE:AET), Humana Inc. (NYSE:HUM), and WellPoint, Inc. (NYSE:WLP). Among these three, it has the biggest market capitalization of $59.9B, a far cry from the next competitor. WLP, with only $23.15B market cap.
Recent Price Movement:
The month of April saw a 52-week record high of $59.40 on April 3. Since then, the price has steadily declined by little amount to the last closing price of $57.32 on April 18; the lowest closing price since its peak price. The 52-week peak price may have reached its resistance level, but if the company reports are good, UNH may yet break another record.
