Analyzing WellCare Health Plans (WCG) and UnitedHealth Group (UNH)
WellCare Health Plans (NYSE: WCG) and UnitedHealth Group (NYSE:UNH) are both mid-cap medical companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, earnings, risk, dividends, valuation, analyst recommendations and profitabiliy.
Risk and Volatility
WellCare Health Plans has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, UnitedHealth Group has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500.
Institutional & Insider Ownership
98.7% of WellCare Health Plans shares are held by institutional investors. Comparatively, 86.3% of UnitedHealth Group shares are held by institutional investors. 0.5% of WellCare Health Plans shares are held by insiders. Comparatively, 0.9% of UnitedHealth Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
UnitedHealth Group pays an annual dividend of $3.00 per share and has a dividend yield of 1.5%. WellCare Health Plans does not pay a dividend. UnitedHealth Group pays out 35.1% of its earnings in the form of a dividend. WellCare Health Plans has increased its dividend for 7 consecutive years.
Earnings & Valuation
This table compares WellCare Health Plans and UnitedHealth Group’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|WellCare Health Plans||$14.65 billion||0.53||$656.20 million||$5.69||30.44|
|UnitedHealth Group||$192.60 billion||1.00||$15.57 billion||$8.54||22.82|
UnitedHealth Group has higher revenue and earnings than WellCare Health Plans. UnitedHealth Group is trading at a lower price-to-earnings ratio than WellCare Health Plans, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent recommendations for WellCare Health Plans and UnitedHealth Group, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|WellCare Health Plans||0||10||3||0||2.23|
WellCare Health Plans currently has a consensus price target of $169.80, suggesting a potential downside of 1.97%. UnitedHealth Group has a consensus price target of $199.55, suggesting a potential upside of 2.40%. Given UnitedHealth Group’s stronger consensus rating and higher possible upside, analysts clearly believe UnitedHealth Group is more favorable than WellCare Health Plans.
This table compares WellCare Health Plans and UnitedHealth Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|WellCare Health Plans||1.85%||14.75%||4.37%|
UnitedHealth Group beats WellCare Health Plans on 12 of the 17 factors compared between the two stocks.
About WellCare Health Plans
WellCare Health Plans, Inc. is a managed care company. The Company focuses on government-sponsored managed care services, primarily through Medicaid, Medicare Advantage (MA) and Medicare Prescription Drug Plans (PDPs), to families, children, seniors and individuals with medical needs. The Company operates through three segments: Medicaid Health Plans, Medicare Health Plans and Medicare PDPs. As of December 31, 2016, it served approximately 3.9 million members in 50 states and the District of Columbia. As of December 31, 2016, it operated Medicaid health plans in Arizona, Florida, Georgia, Hawaii, Illinois, Kentucky, Missouri, New Jersey, New York and South Carolina. As of December 31, 2016, it offered MA coordinated care plans (CCPs) in certain counties in Arizona, Arkansas, California, Connecticut, Florida, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Mississippi, New Jersey, New York, South Carolina, Tennessee and Texas.
About UnitedHealth Group
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.
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