UNH at Three-Year Low

UnitedHealth Group (UNH) is plunging today on news that WellPoint (WLP) has cut its earnings forecast. If you recall, UNH is company that does nothing but make huge profits and awful headlines.
For the record, UnitedHealth has said that it expects 2008 EPS of $3.95 to $4 a share. The company has publicly made this estimate not once, but twice. That would be a yearly increased of 13% to 14% over 2007. Not bad.
But now the stock is down to $40 a share. Today, it reached its lowest point since 2004. In 2005, the company made $2.48 a share. So the stock is the same price, but profits are about 60% higher.

In the above chart, the blue line is the stock price and it follows the left scale. The yellow is the EPS and it follows the right. The red part is the estimate. When the lines cross, the P/E ratio is 17.5.

Posted by Eddy Elfenbein on March 11th, 2008 at 11:29 am

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