In this article I am going to analyze UbitedHealth Group Inc. ,which its ticker (UNH) based in its earning per share and its (P/E) ratio to see how much its stock will worth in the 2027.
First, let see how does UNH’s EPS did in the past six year starting form 2017 in order to estimate its growth rate, as shown below:
As we can see from the above chart, UNH’s EPS was increasing in uptrend from year 2017 where it was 2.51$ until it reached 5.55$ in year 2022 with growth rate equal to 17.2%.
Now that we have the growth rate of UNH’s EPS in the last five years, we are going to use this growth rate to estimate what will its EPS be in 2027 ,which is five years from now by applying the following formula:
- PV = UNH EPS in year 2022 = 5.55 $
- i = growth rate of UNH EPS estimated above = 17.2%
- n = years of investment = 5 years in 2027
By substitute the numbers estimated early in the above formula, I end up with Unitedhealth Group’s EPS in year 2027 equal to 12.27$.
Now, I have to see what was (P/E) ratio that Nike did have in the last six years, which as shown below:
Now we can estimate two scenarios for UNH stock price which is Bull market and the bear market.
For Bull market , I am going to take the highest (P/E) ratio which was 24.66 in year 2022, to see what will be the price of UNH stock in 2027:
Bull market UNH Stock’s price in 2027= (24.66)*(12.27$) = 302.57$.
For Bear market, I will take the lowest (P/E) ratio which was 15.08 in year 2019, to see what will be the price of UNH stock in 2027.
Bear market UNH Stock’s price in 2027= (15.08)*(12.27$) = 185.03$.
As of writing this article, UnitedHealth Group stock price is 486$ which is above both scenarios estimated above. Therefore, I am going to pass investing in this company and look for other opportunity specially when I know investing in Medical care companies is more risker than other field because it has many constrains.