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 $506.02, Elevance Health Inc has witnessed a daily gain of 1.19%, marked against a three-month change of 7.61%. A thorough analysis, underlined by the GF Score, suggests that Elevance Health Inc is well-positioned for substantial growth in the near future.
What Is 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.
- Financial strength rank: 6/10
- Profitability rank: 8/10
- Growth rank: 10/10
- GF Value rank: 7/10
- Momentum rank: 8/10
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 particularly high Growth rank and strong scores in Profitability and Momentum, Elevance Health Inc's GF Score of 93 out of 100 signals the highest outperformance potential.
Understanding Elevance Health Inc's Business
Elevance Health Inc 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.
With a market cap of $117.71 billion and sales of $171.34 billion, Elevance Health Inc's operating margin is currently not applicable. However, the company's scale and diversified income streams, as depicted in the income breakdown below, contribute to its financial resilience and growth prospects.
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 8.49, 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. Despite a decrease in Net Margin over the past five years, the company's profitability remains robust. The Piotroski F-Score confirms Elevance Health Inc's solid financial situation based on Joseph Piotroski's nine-point scale, which measures a company's profitability, funding and operating efficiency. Elevance Health Inc's strong Predictability Rank of 4.0 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 14.6%, which outperforms better than 57.89% of 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 11.2, and the rate over the past five years is 10.9. This trend accentuates the company's continued capability to drive growth.
Next Steps
Considering Elevance Health Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. The company's strategic initiatives, competitive advantages, and consistent operational performance make it a compelling choice for value investors seeking long-term growth. As the healthcare industry continues to evolve, Elevance Health Inc's adaptability and market leadership position it well to capitalize on future opportunities.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
