HUM

Earnings Roundup: V, INTC, HUM, PYPL

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By Brian Nelson, CFA Visa (V) Operating and Free Cash Flow Margins Remain Robust, Consumer Spending Remains Resilient Image: Visa’s operating margins are phenomenal. Image Source: Visa On January 25, top-weighted Best Ideas Newsletter portfolio holding Visa reported excellent first-quarter fiscal 2024 results that beat on the top and bottom lines. Net revenues advanced 9% on a year-over-year basis, while the firm was able to drive non-GAAP net income 8% higher and non-GAAP earnings per share 11% higher. In the quarter, payments volume advanced 8%, cross-border volume advanced 16%, and processed transactions increased 9%, all on a year-over-year basis. The company’s operating margin came in at an impressive 69% in the quarter, and it hauled in ~$3.35 billion in free … Read more

UnitedHealth Group Still a Free-Cash-Flow Generating Machine

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Image: UnitedHealth Group continues to drive strong revenue and operating earnings performance. Image Source: UnitedHealth Group. By Brian Nelson, CFA On January 12, healthcare benefits provider UnitedHealth Group (UNH) reported strong fourth-quarter 2023 results that showed revenue advancing 14% on a year-over-year basis thanks to strength at its UnitedHealthcare and Optum divisions, while earnings from operations advanced 11.6%. UnitedHealth is facing some temporary cost pressures in its business due to pent-up demand for discretionary procedures following the worst of the COVID-19 pandemic, but its net margin held up fine in the period, coming in at 5.8%, the same level a year ago. Management reaffirmed its previously-issued 2024 guidance, and we continue to like UnitedHealth Group as a key weighting in … Read more

12 Reasons to Stay Aggressive in 2024

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By Brian Nelson, CFA 1. The Fed has signaled that rate cuts could start with inflation at a 2 handle (2 point something) and not at exactly 2.0%. That means that the Fed may become anticipatory to prevent overshooting to the downside with inflation. We see this as positive for long-duration equities, particularly those whose free cash flow generation is robust in the out-years, inclusive of big cap tech and the stylistic area of large cap growth. 2. Unemployment is at structural lows of 3.7%. Employers are working hard to keep talent on board, and with each paycheck, employees are pumping more and more money into the stock market via retirement accounts. This tailwind remains a stiff one and will … Read more

There Will Be Volatility

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By Brian Nelson, CFA Last year, 2022, was a big test for equity investors, and the downside volatility that we witnessed during the year wasn’t comfortable, to say the least. Following the COVID-19 crash and rebound during 2020, and then the market surge in 2021, it wouldn’t be a stretch to say many investors’ heads are probably still spinning from all the volatility witnessed to start this decade. That said, part of what we’ve been warning about the past few years with respect to the equity market, especially in Value Trap, is that the proliferation of price-agnostic trading (e.g. quant, machine/algorithmic trading, etc.) will only lead to more and more market volatility, so while we were somewhat surprised by last … Read more

ICYMI: Questions for Valuentum’s Brian Nelson

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Valuentum’s President Brian Nelson, CFA, answers your questions. Q: What Is Valuentum? A: In short, it is a strategy that combines the concepts of value and momentum within individual stocks. We measure value through the cash-based sources of intrinsic value – net cash on the balance sheet and future expected free cash flow. We measure momentum rather simply, generally via relative strength or other technical and momentum indicators. We like stocks with strong net cash positions on the balance sheet, ones that are generating tremendous free cash flow, and have strong secular growth prospects such that the prospect for expectations of free cash flow can continue to be ratcheted higher. Today, most Valuentum stocks are included in the stylistic area … Read more

UnitedHealth Group’s Long-Term Story Intact

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Image: UnitedHealth Group’s shares are facing pressure as the pace of medical procedures normalizes following COVID-19. We still like shares. By Brian Nelson, CFA On June 7, UnitedHealth Group (UNH) raised its quarterly dividend nearly 14%, to $1.88 per share, which reflects a forward estimated dividend yield of 1.65%. The company remains a staple in the Dividend Growth Newsletter portfolio and is a new add in the Best Ideas Newsletter portfolio. Recent comments by UNH’s John Rex on June 14 regarding the firm’s healthcare costs during the second quarter have put shares under pressure during the trading session. Discretionary surgeries have picked back up following a lull during most of the COVID-19 pandemic as hospital capacity was largely constrained during … Read more

UnitedHealth Group Raises Guidance for 2023

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By Brian Nelson, CFA On April 14, UnitedHealth Group (UNH) reported first-quarter 2023 that beat the consensus estimates on both the top and bottom lines. Revenue advanced 14.7% in the quarter, while non-GAAP earnings per share of $6.26 beat the consensus number by $0.18, increasing from $5.49 per share in the prior-year period. The high end of the fair value estimate range of UnitedHealthGroup stands north of $600 per share, implying considerable valuation upside potential compared to where shares are trading at the time of this writing. Image: We view valuation as a range of probable fair value outcomes. The high end of the fair value estimate range for UnitedHealth Group stands north of $600. Shares are currently trading at … Read more

UnitedHealth Is A Free Cash Flow Powerhouse; Shares Yield ~1.3%

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Image Source: UnitedHealth Group By Brian Nelson, CFA UnitedHealth Group (UNH) is a holding in the Dividend Growth Newsletter portfolio, and it completed a fantastic 2022 when it reported its fourth-quarter results, released January 13. UnitedHealth Group is a free cash flow generating powerhouse. During 2022, the company hauled in $26.2 billion in cash flow from operations and spent just $2.8 billion on property, equipment, and capitalized software, good enough for $23.4 billion in free cash flow, materially higher than the $5.99 billion it paid in cash dividends over the same time. The Dividend Cushion ratio of UnitedHealth Group is a very healthy 3.5, and our valuation puts the high end of a fair value estimate range for shares of … Read more

Exclusive Call: What To Expect From Valuentum in 2023

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Video: 2022 was a successful year by almost every measure from the simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio to the simulated High Yield Dividend Newsletter portfolio and Exclusive publication and beyond. There were some disappointments in 2022, of course, but the year showed the value of a Valuentum membership. Join President of Investment Research Brian Nelson on this year’s Exclusive conference call to learn what to expect from Valuentum in 2023. Cheers! Transcript President of Investment Research Brian Nelson: Happy Holidays everyone! I hope that you are enjoying this special time of year with family and friends, and I wish you all a wonderful 2023! I just wanted to take a few minutes to recap … Read more

UnitedHealth Group Sets Bar Low with Newly Issued 2023 Guidance; We Expect Upward Revisions Throughout the Year

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Image: UnitedHealth Group issued a strong outlook for 2023. We continue to like shares in the simulated Dividend Growth Newsletter portfolio. Image Source: UnitedHealth By Valuentum Analysts On November 28, UnitedHealth Group (UNH) reiterated its guidance for fiscal 2022 in advance of its 2022 Investor Conference and issued what we believe to be a conservative outlook for 2023. UnitedHealth Group operates two complementary businesses, Optum, which provides technology and data to health providers to offer guidance and tools, and UnitedHealthcare, which offers health benefits. The company is a key “position” in the simulated Dividend Growth Newsletter portfolio and yields ~1.2% at the time of this writing. When UnitedHealth Group reported third-quarter 2022 results October 14, “Dividend Growth Idea UnitedHealth Outperforming,” … Read more