UnitedHealth Group (NYSE: UNH) recently announced its Q1 results, with both revenue and earnings falling short of market expectations. The company posted revenue of $109.6 billion and adjusted earnings of $7.20 per share, compared to the consensus estimates of $111.6 billion and $7.29, respectively. Due to the disappointing results, UNH stock is trending lower in pre-market trading on Thursday, April 17. If you’re looking for upside with less volatility than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P and delivered over 91% returns since inception. Separately, check out – Buy, Sell, Or Hold Eli Lilly Stock At $850?
How Did UNH Fare In Q1?
In the first quarter, UnitedHealth Group’s revenue rose 9.8% year-over-year to $109.6 billion. This increase was primarily fueled by solid performances across both its segments, with UnitedHealthcare seeing a 12% growth and Optum expanding by 5% year-over-year.
A key investor metric, the medical care ratio, stood at 84.8%. Although slightly higher than the 84.3% in the year-ago quarter, it was better than the expected 85.9%, which is a positive. Moreover, UNH improved its overall operating profit margin by 40 basis points year-over-year to 8.3% in Q1. Adjusted earnings per share increased to $7.20, up from $6.91 in the prior-year period.
However, UnitedHealth Group has revised its full-year 2025 earnings forecast downward. The updated guidance ranges between $24.65 and $25.15 per share, reduced from the earlier projection of $26.00 to $26.50 per share.
To summarize, although UNH missed on revenue and earnings and lowered its earnings forecast — developments likely to weigh on the stock — the better-than-expected medical care ratio could offer some comfort to investors.
What Does This Mean For UNH Stock?
The market has responded negatively to UnitedHealth Group’s Q1 showing, with shares down 20% in pre-market trading on Thursday, April 17. This is a sharp reversal from the stock’s performance as of April 16, when it had gained 16% year-to-date, outperforming the S&P 500 index, which had dropped 10% over the same timeframe.
Looking at a broader time horizon, UNH’s stock performance over the past four years has been mixed, mirroring the volatility of the S&P 500. Annual returns for the stock were 45% in 2021, 7% in 2022, 1% in 2023, and -2% in 2024. The current pre-market selloff suggests investors are unimpressed with the Q1 results.
By comparison, the Trefis High Quality Portfolio, comprising 30 stocks, has shown lower volatility. It has clearly outpaced the S&P 500 over the last four years. Why is that? These HQ Portfolio stocks tend to deliver better returns with lower risk relative to the benchmark index, as highlighted in the HQ Portfolio performance metrics.
Given the current uncertain macroeconomic backdrop, including persistent tariffs and a worsening trade war, the key question is whether UNH could continue underperforming the S&P 500 as it did in 2023 and 2024, or whether a recovery is possible. While we are updating our UNH model to reflect the latest quarterly data, early market signals — with the stock hovering around $470 in pre-market on April 17 — indicate that investors are likely displeased with Q1 outcomes.
At this price level, UNH stock trades at a forward P/E ratio of 19x, based on the midpoint of its projected forward earnings of $24.90. This is below its average P/E of 21x over the past three years. In light of its recent performance and lowered full-year outlook, compounded by broader economic concerns, a modest compression in UNH’s valuation multiple appears warranted.
While UNH stock is trending down, it’s useful to examine how UnitedHealth Group Peers are performing on key metrics. You can explore more cross-industry comparisons at Peer Comparisons.
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