Intrinsic value of UnitedHealth Group - UNH

Previous Close

$266.67

  Intrinsic Value

$547.87

stock screener

  Rating & Target

str. buy

+105%

Previous close

$266.67

 
Intrinsic value

$547.87

 
Up/down potential

+105%

 
Rating

str. buy

We calculate the intrinsic value of UNH stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 256.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  12.10
  11.39
  10.75
  10.18
  9.66
  9.19
  8.77
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.80
  6.62
  6.46
  6.32
  6.18
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
Revenue, $m
  225,499
  251,184
  278,188
  306,497
  336,099
  366,995
  399,192
  432,708
  467,568
  503,808
  541,471
  580,608
  621,281
  663,558
  707,514
  753,232
  800,803
  850,326
  901,904
  955,649
  1,011,681
  1,070,124
  1,131,113
  1,194,786
  1,261,292
  1,330,785
  1,403,429
  1,479,395
  1,558,862
  1,642,018
Variable operating expenses, $m
  193,167
  214,450
  236,828
  260,286
  284,816
  310,418
  337,099
  364,872
  393,759
  423,789
  448,695
  481,126
  514,831
  549,863
  586,288
  624,173
  663,593
  704,630
  747,371
  791,907
  838,338
  886,768
  937,307
  990,070
  1,045,181
  1,102,767
  1,162,965
  1,225,914
  1,291,765
  1,360,673
Fixed operating expenses, $m
  13,456
  13,752
  14,054
  14,363
  14,679
  15,002
  15,332
  15,670
  16,014
  16,367
  16,727
  17,095
  17,471
  17,855
  18,248
  18,650
  19,060
  19,479
  19,908
  20,346
  20,793
  21,251
  21,718
  22,196
  22,684
  23,183
  23,693
  24,215
  24,747
  25,292
Total operating expenses, $m
  206,623
  228,202
  250,882
  274,649
  299,495
  325,420
  352,431
  380,542
  409,773
  440,156
  465,422
  498,221
  532,302
  567,718
  604,536
  642,823
  682,653
  724,109
  767,279
  812,253
  859,131
  908,019
  959,025
  1,012,266
  1,067,865
  1,125,950
  1,186,658
  1,250,129
  1,316,512
  1,385,965
Operating income, $m
  18,877
  22,982
  27,306
  31,847
  36,604
  41,574
  46,761
  52,166
  57,795
  63,652
  76,049
  82,387
  88,980
  95,839
  102,978
  110,410
  118,151
  126,216
  134,625
  143,396
  152,549
  162,105
  172,088
  182,520
  193,427
  204,835
  216,771
  229,266
  242,349
  256,053
EBITDA, $m
  26,562
  30,824
  35,314
  40,028
  44,966
  50,126
  55,510
  61,120
  66,962
  73,041
  79,364
  85,942
  92,784
  99,902
  107,310
  115,022
  123,053
  131,423
  140,147
  149,247
  158,743
  168,657
  179,013
  189,835
  201,149
  212,982
  225,364
  238,324
  251,893
  266,106
Interest expense (income), $m
  1,055
  1,711
  2,303
  2,931
  3,592
  4,285
  5,010
  5,767
  6,555
  7,375
  8,229
  9,116
  10,038
  10,996
  11,992
  13,027
  14,103
  15,222
  16,387
  17,599
  18,862
  20,177
  21,549
  22,980
  24,473
  26,032
  27,660
  29,361
  31,139
  32,999
  34,945
Earnings before tax, $m
  17,166
  20,679
  24,375
  28,255
  32,318
  36,564
  40,994
  45,612
  50,419
  55,423
  66,933
  72,349
  77,984
  83,848
  89,951
  96,307
  102,929
  109,830
  117,026
  124,534
  132,372
  140,556
  149,108
  158,047
  167,395
  177,175
  187,410
  198,127
  209,350
  221,108
Tax expense, $m
  4,635
  5,583
  6,581
  7,629
  8,726
  9,872
  11,069
  12,315
  13,613
  14,964
  18,072
  19,534
  21,056
  22,639
  24,287
  26,003
  27,791
  29,654
  31,597
  33,624
  35,740
  37,950
  40,259
  42,673
  45,197
  47,837
  50,601
  53,494
  56,525
  59,699
Net income, $m
  12,531
  15,096
  17,794
  20,626
  23,592
  26,692
  29,926
  33,296
  36,806
  40,459
  48,861
  52,815
  56,928
  61,209
  65,664
  70,304
  75,138
  80,176
  85,429
  90,910
  96,631
  102,606
  108,849
  115,374
  122,198
  129,338
  136,810
  144,632
  152,826
  161,409

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  155,839
  173,589
  192,252
  211,815
  232,273
  253,625
  275,876
  299,038
  323,129
  348,174
  374,202
  401,250
  429,358
  458,575
  488,952
  520,547
  553,423
  587,647
  623,292
  660,435
  699,157
  739,547
  781,695
  825,699
  871,660
  919,686
  969,889
  1,022,388
  1,077,306
  1,134,774
Adjusted assets (=assets-cash), $m
  155,839
  173,589
  192,252
  211,815
  232,273
  253,625
  275,876
  299,038
  323,129
  348,174
  374,202
  401,250
  429,358
  458,575
  488,952
  520,547
  553,423
  587,647
  623,292
  660,435
  699,157
  739,547
  781,695
  825,699
  871,660
  919,686
  969,889
  1,022,388
  1,077,306
  1,134,774
Revenue / Adjusted assets
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
  1.447
Average production assets, $m
  40,590
  45,213
  50,074
  55,169
  60,498
  66,059
  71,855
  77,887
  84,162
  90,685
  97,465
  104,510
  111,831
  119,440
  127,352
  135,582
  144,145
  153,059
  162,343
  172,017
  182,103
  192,622
  203,600
  215,061
  227,033
  239,541
  252,617
  266,291
  280,595
  295,563
Working capital, $m
  -32,697
  -36,422
  -40,337
  -44,442
  -48,734
  -53,214
  -57,883
  -62,743
  -67,797
  -73,052
  -78,513
  -84,188
  -90,086
  -96,216
  -102,589
  -109,219
  -116,117
  -123,297
  -130,776
  -138,569
  -146,694
  -155,168
  -164,011
  -173,244
  -182,887
  -192,964
  -203,497
  -214,512
  -226,035
  -238,093
Total debt, $m
  42,640
  54,285
  66,527
  79,361
  92,781
  106,788
  121,384
  136,579
  152,383
  168,812
  185,887
  203,630
  222,069
  241,235
  261,163
  281,889
  303,456
  325,907
  349,290
  373,655
  399,057
  425,553
  453,202
  482,068
  512,219
  543,724
  576,657
  611,096
  647,123
  684,822
Total liabilities, $m
  102,230
  113,875
  126,117
  138,951
  152,371
  166,378
  180,974
  196,169
  211,973
  228,402
  245,477
  263,220
  281,659
  300,825
  320,753
  341,479
  363,046
  385,497
  408,880
  433,245
  458,647
  485,143
  512,792
  541,658
  571,809
  603,314
  636,247
  670,686
  706,713
  744,412
Total equity, $m
  53,609
  59,715
  66,135
  72,864
  79,902
  87,247
  94,901
  102,869
  111,156
  119,772
  128,726
  138,030
  147,699
  157,750
  168,200
  179,068
  190,378
  202,151
  214,413
  227,190
  240,510
  254,404
  268,903
  284,040
  299,851
  316,372
  333,642
  351,701
  370,593
  390,362
Total liabilities and equity, $m
  155,839
  173,590
  192,252
  211,815
  232,273
  253,625
  275,875
  299,038
  323,129
  348,174
  374,203
  401,250
  429,358
  458,575
  488,953
  520,547
  553,424
  587,648
  623,293
  660,435
  699,157
  739,547
  781,695
  825,698
  871,660
  919,686
  969,889
  1,022,387
  1,077,306
  1,134,774
Debt-to-equity ratio
  0.800
  0.910
  1.010
  1.090
  1.160
  1.220
  1.280
  1.330
  1.370
  1.410
  1.440
  1.480
  1.500
  1.530
  1.550
  1.570
  1.590
  1.610
  1.630
  1.640
  1.660
  1.670
  1.690
  1.700
  1.710
  1.720
  1.730
  1.740
  1.750
  1.750
Adjusted equity ratio
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344
  0.344

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  12,531
  15,096
  17,794
  20,626
  23,592
  26,692
  29,926
  33,296
  36,806
  40,459
  48,861
  52,815
  56,928
  61,209
  65,664
  70,304
  75,138
  80,176
  85,429
  90,910
  96,631
  102,606
  108,849
  115,374
  122,198
  129,338
  136,810
  144,632
  152,826
  161,409
Depreciation, amort., depletion, $m
  7,685
  7,842
  8,008
  8,181
  8,362
  8,551
  8,749
  8,954
  9,167
  9,389
  3,315
  3,555
  3,804
  4,063
  4,332
  4,612
  4,903
  5,206
  5,522
  5,851
  6,194
  6,552
  6,925
  7,315
  7,722
  8,148
  8,592
  9,058
  9,544
  10,053
Funds from operations, $m
  20,216
  22,938
  25,801
  28,807
  31,954
  35,243
  38,675
  42,250
  45,973
  49,848
  52,176
  56,370
  60,732
  65,271
  69,996
  74,916
  80,041
  85,382
  90,951
  96,761
  102,825
  109,158
  115,774
  122,689
  129,920
  137,485
  145,402
  153,690
  162,370
  171,462
Change in working capital, $m
  -3,529
  -3,724
  -3,916
  -4,105
  -4,292
  -4,480
  -4,669
  -4,860
  -5,055
  -5,255
  -5,461
  -5,675
  -5,898
  -6,130
  -6,374
  -6,629
  -6,898
  -7,181
  -7,479
  -7,793
  -8,125
  -8,474
  -8,843
  -9,233
  -9,643
  -10,077
  -10,533
  -11,015
  -11,523
  -12,058
Cash from operations, $m
  23,745
  26,662
  29,717
  32,912
  36,247
  39,723
  43,343
  47,110
  51,028
  55,103
  57,638
  62,045
  66,630
  71,401
  76,370
  81,545
  86,939
  92,563
  98,430
  104,554
  110,950
  117,632
  124,617
  131,922
  139,564
  147,562
  155,935
  164,705
  173,892
  183,520
Maintenance CAPEX, $m
  -1,233
  -1,381
  -1,538
  -1,703
  -1,877
  -2,058
  -2,247
  -2,444
  -2,649
  -2,863
  -3,085
  -3,315
  -3,555
  -3,804
  -4,063
  -4,332
  -4,612
  -4,903
  -5,206
  -5,522
  -5,851
  -6,194
  -6,552
  -6,925
  -7,315
  -7,722
  -8,148
  -8,592
  -9,058
  -9,544
New CAPEX, $m
  -4,340
  -4,623
  -4,861
  -5,095
  -5,328
  -5,561
  -5,796
  -6,033
  -6,275
  -6,523
  -6,779
  -7,045
  -7,321
  -7,610
  -7,912
  -8,229
  -8,563
  -8,914
  -9,284
  -9,674
  -10,086
  -10,520
  -10,978
  -11,461
  -11,971
  -12,509
  -13,076
  -13,674
  -14,304
  -14,968
Cash from investing activities, $m
  -5,573
  -6,004
  -6,399
  -6,798
  -7,205
  -7,619
  -8,043
  -8,477
  -8,924
  -9,386
  -9,864
  -10,360
  -10,876
  -11,414
  -11,975
  -12,561
  -13,175
  -13,817
  -14,490
  -15,196
  -15,937
  -16,714
  -17,530
  -18,386
  -19,286
  -20,231
  -21,224
  -22,266
  -23,362
  -24,512
Free cash flow, $m
  18,172
  20,659
  23,318
  26,113
  29,042
  32,104
  35,301
  38,633
  42,104
  45,717
  47,774
  51,685
  55,754
  59,988
  64,395
  68,984
  73,764
  78,746
  83,940
  89,358
  95,013
  100,918
  107,087
  113,535
  120,278
  127,331
  134,712
  142,439
  150,531
  159,008
Issuance/(repayment) of debt, $m
  10,948
  11,644
  12,243
  12,834
  13,420
  14,007
  14,597
  15,194
  15,804
  16,429
  17,074
  17,743
  18,439
  19,166
  19,927
  20,726
  21,567
  22,451
  23,383
  24,366
  25,402
  26,495
  27,649
  28,866
  30,151
  31,505
  32,933
  34,439
  36,026
  37,699
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  10,948
  11,644
  12,243
  12,834
  13,420
  14,007
  14,597
  15,194
  15,804
  16,429
  17,074
  17,743
  18,439
  19,166
  19,927
  20,726
  21,567
  22,451
  23,383
  24,366
  25,402
  26,495
  27,649
  28,866
  30,151
  31,505
  32,933
  34,439
  36,026
  37,699
Total cash flow (excl. dividends), $m
  29,121
  32,303
  35,561
  38,947
  42,462
  46,111
  49,897
  53,828
  57,908
  62,146
  64,848
  69,428
  74,193
  79,154
  84,322
  89,710
  95,331
  101,197
  107,323
  113,724
  120,415
  127,414
  134,737
  142,402
  150,428
  158,836
  167,645
  176,878
  186,557
  196,707
Retained Cash Flow (-), $m
  -5,833
  -6,106
  -6,420
  -6,730
  -7,037
  -7,345
  -7,654
  -7,968
  -8,287
  -8,615
  -8,954
  -9,304
  -9,669
  -10,051
  -10,450
  -10,869
  -11,309
  -11,773
  -12,262
  -12,777
  -13,321
  -13,894
  -14,499
  -15,137
  -15,811
  -16,521
  -17,270
  -18,060
  -18,892
  -19,769
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  23,288
  26,197
  29,141
  32,217
  35,425
  38,766
  42,243
  45,860
  49,620
  53,531
  55,895
  60,124
  64,524
  69,104
  73,873
  78,842
  84,021
  89,424
  95,061
  100,947
  107,095
  113,520
  120,238
  127,265
  134,618
  142,315
  150,375
  158,818
  167,665
  176,938
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  22,328
  23,982
  25,361
  26,527
  27,458
  28,134
  28,539
  28,663
  28,504
  28,064
  26,543
  25,657
  24,533
  23,199
  21,688
  20,035
  18,282
  16,468
  14,637
  12,827
  11,077
  9,419
  7,881
  6,482
  5,237
  4,152
  3,227
  2,457
  1,830
  1,332
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

UnitedHealth Group Incorporated is a health and well-being company. The Company operates through four segments: UnitedHealthcare, OptumHealth, OptumInsight and OptumRx. It conducts its operations through two business platforms: health benefits operating under UnitedHealthcare and health services operating under Optum. UnitedHealthcare provides healthcare benefits to an array of customers and markets, and includes UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare & Retirement, UnitedHealthcare Community & State, and UnitedHealthcare Global businesses. Optum is a health services business serving the healthcare marketplace, including payers, care providers, employers, governments, life sciences companies and consumers, through its OptumHealth, OptumInsight and OptumRx businesses. OptumInsight provides services, technology and healthcare solutions to participants in the healthcare industry. OptumRx provides retail network contracting, purchasing and clinical solutions.

FINANCIAL RATIOS  of  UnitedHealth Group (UNH)

Valuation Ratios
P/E Ratio 36.2
Price to Sales 1.4
Price to Book 6.6
Price to Tangible Book
Price to Cash Flow 25.9
Price to Free Cash Flow 31.4
Growth Rates
Sales Growth Rate 17.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 9.6%
Cap. Spend. - 3 Yr. Gr. Rate 5.5%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 67.3%
Total Debt to Equity 86.1%
Interest Coverage 12
Management Effectiveness
Return On Assets 6.5%
Ret/ On Assets - 3 Yr. Avg. 6.6%
Return On Total Capital 10.2%
Ret/ On T. Cap. - 3 Yr. Avg. 10.6%
Return On Equity 19.5%
Return On Equity - 3 Yr. Avg. 18.1%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 8.1%
EBITDA Margin - 3 Yr. Avg. 8.4%
Operating Margin 7%
Oper. Margin - 3 Yr. Avg. 7.3%
Pre-Tax Margin 6.4%
Pre-Tax Margin - 3 Yr. Avg. 6.8%
Net Profit Margin 3.8%
Net Profit Margin - 3 Yr. Avg. 3.9%
Effective Tax Rate 40.4%
Eff/ Tax Rate - 3 Yr. Avg. 41.6%
Payout Ratio 32.2%

UNH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the UNH stock intrinsic value calculation we used $201159 million for the last fiscal year's total revenue generated by UnitedHealth Group. The default revenue input number comes from 0001 income statement of UnitedHealth Group. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our UNH stock valuation model: a) initial revenue growth rate of 12.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for UNH is calculated based on our internal credit rating of UnitedHealth Group, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of UnitedHealth Group.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of UNH stock the variable cost ratio is equal to 86%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $13166 million in the base year in the intrinsic value calculation for UNH stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for UnitedHealth Group.

Corporate tax rate of 27% is the nominal tax rate for UnitedHealth Group. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the UNH stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for UNH are equal to 18%.

Life of production assets of 29.4 years is the average useful life of capital assets used in UnitedHealth Group operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for UNH is equal to -14.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $47776 million for UnitedHealth Group - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 962.473 million for UnitedHealth Group is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of UnitedHealth Group at the current share price and the inputted number of shares is $256.7 billion.

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COMPANY NEWS

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▶ Top 3 Healthcare Stocks for 2018   [Sep-16-18 08:24PM  Investopedia]
▶ UnitedHealth Falls 3.02%   [04:50PM  Investing.com]
▶ Tacoma-based Sound Physicians sold for $2.2 billion   [Aug-31-18 05:55PM  American City Business Journals]
▶ Fitbit Health Solutions COO talks how it plans to fend off Apple   [05:04PM  American City Business Journals]
▶ 3 ETFs for Johnson & Johnson's Healthy Breakout   [Aug-28-18 06:40PM  Investopedia]
▶ Fidelity And American Funds: Comparing Their Q2 Moves In Key Stocks   [Aug-23-18 01:21PM  Investor's Business Daily]
▶ Pronovost leaves UnitedHealthcare weeks after being named chief medical officer   [Aug-14-18 03:30PM  American City Business Journals]
▶ UnitedHealth in talks to buy pharmacy chain Genoa: report   [08:09AM  American City Business Journals]
▶ Which Stocks Are The Best Mutual Funds Buying? Here's The Latest List   [Aug-07-18 04:05PM  Investor's Business Daily]
▶ 3 Healthcare Stocks to Buy for the Sector Rebound   [Aug-06-18 03:00PM  InvestorPlace]
▶ Health Insurance Carriers Headed for New Highs   [Aug-03-18 09:35AM  Investopedia]
▶ Health Insurers Fly As Trump Takes New Ax To ObamaCare   [Aug-01-18 04:22PM  Investor's Business Daily]
▶ 5 Retirement Stocks to Buy and Hold   [10:39AM  InvestorPlace]
▶ Healthcare ETF (IHF) Hits New 52-Week High   [Jul-24-18 08:30AM  Zacks]
▶ Group protests state's KanCare RFP process   [Jul-23-18 03:57PM  American City Business Journals]
▶ 5 Vanguard Funds to Beat the S&P 500   [10:26AM  InvestorPlace]
▶ Amazon fuels T. Rowe Price U.S. mutual funds past the S&P 500   [08:57AM  American City Business Journals]
▶ MARKETS: Honeywell stock pops after raising full year guidance   [Jul-20-18 11:16AM  Yahoo Finance Video]
▶ Here's What UnitedHealth Investors Should Be Watching   [Jul-19-18 04:14PM  Motley Fool]

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