MINNETONKA, MN – June 29, 2025 – UnitedHealth Group Incorporated (UNH), a dominant force in the health insurance and healthcare services sectors, is currently considered fairly valued by recent intrinsic value calculations. The company’s last closing price of $309.11 on June 27, 2025, closely aligns with adjusted valuations, offering a nuanced perspective on its market standing.
Key Financial Insights
Research highlights several critical aspects of UnitedHealth Group’s financial performance:
- Strong Return on Equity (ROE): UnitedHealth Group’s trailing 12-month (TTM) Return on Equity stands at an impressive 23.2%. This figure underscores the company’s robust ability to generate profits relative to the equity held by its shareholders.
- Negative Return on Tangible Assets: Conversely, the TTM Return on Tangible Assets is approximately -62.3%. This seemingly concerning negative value is primarily attributed to the substantial presence of intangible assets on the company’s balance sheet, a common characteristic in the healthcare industry.
- Fair Valuation: Despite some initial indications of overvaluation when solely comparing the closing price to a 25% margin of safety, a comprehensive analysis, incorporating market dynamics and industry benchmarks, suggests UNH is fairly valued. Intrinsic value calculations place the share price at $279.36.
Deep Dive into Profitability Metrics
Trailing 12-Month ROE
UnitedHealth Group’s TTM ROE, calculated as net income divided by average common stock equity, showcases the company’s efficiency in converting shareholder investments into profits. For the TTM ending March 31, 2025, the company reported a net income of $22.937 billion, with average equity around $92.8975 billion, resulting in the 23.2% ROE. This strong performance is consistent with UnitedHealth Group’s leadership position within the health insurance sector.
Return on Tangible Assets
The negative TTM Return on Tangible Assets of -62.3% requires a more in-depth understanding. This metric, derived from net income divided by average tangible assets, is significantly impacted by the large volume of intangible assets—such as goodwill from numerous acquisitions—that are prevalent in the healthcare industry. With estimated average tangible assets around -$36.8905 billion for the TTM, the negative return primarily reflects the accounting structure influenced by these substantial intangibles, rather than a fundamental operational weakness.
Valuation Status and Market Context
Intrinsic value calculations, employing both Buffett and McGrew methodologies and adjusted for net debt, arrive at an intrinsic value per share of $279.36. A 25% margin of safety price would be $209.52.
While the last closing price of $309.11 might initially suggest overvaluation when compared directly to the margin of safety price, a broader consideration of market dynamics and industry benchmarks supports a fair valuation assessment. The healthcare sector often commands a premium due to its inherent stability and essential services, which can factor into investor valuations.
UnitedHealth Group’s ability to consistently generate strong returns for shareholders, as evidenced by its high ROE, coupled with the unique accounting implications of its significant intangible assets, contributes to its current fair valuation in the market.
Our preference would be to put “new money” to work in other stocks.
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