Today was a big day for UnitedHealth Group (UNH). Even after dropping the Obamacare individual insurance business, UnitedHealth Group topped analysts’ expectations for the second quarter. Today’s strong earnings announcement has people asking me whether there’s still time to buy the health insurer, so let’s dig into the details.
Compared with the year ago quarter, revenues rose 7.7% to $50.1 billion. This was in line with analysts’ revenue expectations. What’s especially impressive is that total revenues rose, even though the withdrawal from Obamacare cost UnitedHealth Group $1.8 billion in revenue.
Over the same period, earnings from operations jumped 16.5% to $3.7 billion. Excluding special items, adjusted earnings increased 26% to $2.46 per share. Analysts were expecting earnings of $2.38 per share so UnitedHealth Group posted a 3.4% earnings surprise.
Pleased with these results, UnitedHealth Group raised its earnings outlook for FY 2017. The company now expects adjusted earnings to range between $9.75 and $9.90 per share. This would represent between 21.1% and 23.0% annual earnings growth. This revised guidance is also on the higher end of the Street view, which calls for $9.80 earnings per share for FY 2017.
So, on an otherwise down day for the market, UNH shares are holding steady. UNH remains one of my top healthcare plays. With a dividend yield of 1.5%, it trades at less than 16 times forecasted earnings.
For all of these reasons, UNH earns a B-rating in Portfolio Grader and an A-rating in Dividend Grader. There aren’t that many stocks that earn top marks in both of my stock screening tools, so UNH is a solid buy.