Elevance Health Inc (ELV, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $452.74, Elevance Health Inc has witnessed a daily gain of 1.26%, marked against a three-month change of 0.77%. A thorough analysis, underlined by the GF Score, suggests that Elevance Health Inc is well-positioned for substantial growth in the near future.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Here is a breakdown of Elevance Health Inc's GF Score:
- Financial strength rank: 6/10
- Profitability rank: 8/10
- Growth rank: 10/10
- GF Value rank: 7/10
- Momentum rank: 7/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high growth rank and a slightly lower financial strength rank, GuruFocus assigned Elevance Health Inc the GF Score of 92 out of 100, which signals the highest outperformance potential.
Understanding Elevance Health Inc's Business
Elevance Health Inc, with a market cap of $106,686.01 and sales of $165,712, remains one of the leading health insurers in the U.S., providing medical benefits to 48 million medical members as of June 2023. The company offers employer, individual, and government-sponsored coverage plans. Elevance differs from its peers in its unique position as the largest single provider of Blue Cross Blue Shield branded coverage, operating as the licensee for the Blue Cross Blue Shield Association in 14 states. Through acquisitions, such as the Amerigroup deal in 2012 and MMM in 2021, Elevance's reach expands beyond those states through government-sponsored programs such as Medicaid and Medicare Advantage plans, too.
Financial Strength Breakdown
According to the Financial Strength rating, Elevance Health Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Elevance Health Inc stands impressively at 9.76, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With a favorable Debt-to-Revenue ratio of 0.15, Elevance Health Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Elevance Health Inc's impressive standing among its peers in generating profit. Elevance Health Inc Net Margin has increased (-5.50%) over the past five years, as shown by the following data: 2018: 4.07; 2019: 4.61; 2020: 3.75; 2021: 4.40; 2022: 3.85. Elevance Health Inc's strong Predictability Rank of 4.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Elevance Health Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 17.2%, which outperforms better than 66.67% of 18 companies in the Healthcare Plans industry. Moreover, Elevance Health Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 12, and the rate over the past five years is 14.7. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given Elevance Health Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health, consistent profitability, and impressive growth trajectory, making it a compelling investment opportunity. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
