UnitedHealth Group Incorporated (UNH)

Conclusion

UnitedHealth Group is a US health care company with four segments: Optum Health, Optum Insight, Optum Rx and UnitedHealthcare, which offers health benefit plans and government-sponsored programmes. At 397.62 USD on 2026-11-09, its market capitalisation is 356.9 billion USD.

The verdict is undervalued. The price-to-earnings ratio of 22.5 sits at a premium of 1.3% to its ten-year median, and enterprise value to EBITDA of 14.4 at a premium of 1.7% to its median. Price to free cash flow of 15.6 is at a discount of 18.7% to its median. The discounted cash flow gives 655.91 USD per share at a discount rate of 8.87%. The fair value band runs from 458.03 to 687.05 USD with a midpoint of 572.54 USD, a margin of safety of 44.0% at the current price. The reverse DCF implies growth of 2.7% a year, while revenue grew 11.7% a year over five years and free cash flow per share fell 3.3% a year over the same period.

What holds the case up is free cash flow conversion of 143.7% on a trailing twelve-month basis, a Beneish M-score of -2.42 that points to an unlikely risk of manipulation, and net debt to EBITDA of 1.64. What would break it is the current ratio of 0.74, an operating margin of 5.3% against a ten-year median of 8.1%, and an EPS compound growth rate of -3.7% over five years.

Financial health

Financial strength is yellow, held up by net debt to EBITDA of 1.64 and undermined by a current ratio of 0.74. The quick ratio is 0.42, debt to equity is 0.71 and interest coverage is 6.2, which the company's scorecard rates as neutral. The Altman Z-score cannot be assessed because the inputs it needs are not available, and the Altman model was designed for manufacturers rather than a health care company. Insolvency risk is low, about 0.5% by the estimate of the Ohlson model over one to two years, based on figures as of 2025-12-31.

Earnings quality

Earnings quality is green, supported by free cash flow conversion of 143.7% on a trailing basis and 122.6% over five years. The accrual ratio is -2.5%, and stock-based compensation is only 0.2% of revenue, leaving free cash flow after that charge at 21.8 billion USD. The share count fell at a compound rate of 1.1% over five years, which reflects buybacks. The Piotroski score is 6 out of 9, and the Beneish M-score of -2.42 is read as unlikely to signal manipulation. The company beat earnings expectations in 5 of the last 8 quarters, with an average surprise of 5.99%. Analysts raised current-year estimates by 3.9% over 90 days and next-year estimates by 3.8%.

Profitability

Profitability is yellow. The gross margin of 22.8% is below its ten-year median of 23.8%, the operating margin of 5.3% is below 8.1%, and the net margin of 3.5% is below 5.5%. Operating margin stability is 16.6%. Return on invested capital is 13.8% against a weighted average cost of capital of 8.1%, leaving a ROIC minus WACC value of 5.7%, which the company's scorecard rates as good. Return on equity is 15.3%. The DuPont split from 2025 shows a net margin of 2.7%, asset turnover of 1.45 and an equity multiplier of 3.29, so leverage contributes materially to the return on equity. The five-year median ROIC of 22.3% is well above the current figure.

Growth

Growth is yellow. Revenue grew at a compound rate of 11.4% over three years, 11.7% over five and 11.0% over ten, and it grew in all ten of the last ten years. Earnings per share are the weak point, with compound changes of -14.5% over three years, -3.7% over five and a positive 8.2% over ten. Free cash flow per share fell 10.5% over three years and 3.3% over five, and rose 7.6% over ten. Consensus next-year EPS growth is 13.1%, which would reverse part of the recent decline if delivered.

Valuation

Valuation is green, with a single assessment that the verdict is undervalued and a margin of safety of 44.0%. Price to earnings of 22.5 is a premium of 1.3% to its ten-year median of 22.2, and enterprise value to EBITDA of 14.4 is a premium of 1.7% to 14.1. Price to free cash flow of 15.6 is a discount of 18.7% to 19.2, price to sales of 0.79 a discount of 32.1% to 1.17, and price to book of 3.43 a discount of 30.9% to 4.96. The discounted cash flow gives 655.91 USD per share at a discount rate of 8.87%, and the fair value from historical multiples is 489.17 USD. The fair value band is an order of magnitude built on fixed assumptions, including a 5% equity risk premium and capped growth, and is not a price target. The dividend yield is 2.3% and the payout on free cash flow is 35.8%.

Risks

The current ratio of 0.74 is the weakest liquidity measure, so the company depends on continued access to funding and on its cash inflows. Interest coverage of 6.2 leaves less room if earnings fall. The operating margin of 5.3% against a median of 8.1% means that further pressure on costs or pricing would reduce the cushion behind profits. Five-year EPS decline of 3.7% contrasts with the revenue record, and the reverse DCF suggests the price assumes only 2.7% annual growth. The Altman Z-score is not available, and this analysis has no debt maturity schedule and no revenue split by segment, so it cannot show which businesses drive the margin trend or when debt falls due.