An Insider Bought Dow Component UnitedHealth

The company’s peers include Aetna Inc. (NYSE:AET), Humana Inc. (NYSE:HUM), WellPoint, Inc. (NYSE:WLP), and David Einhorn favorite CIGNA Corporation (NYSE:CI). The pricing at these other insurance companies is very similar to that at UnitedHealth: when we look at the industry, we generally see trailing and forward earnings multiples of 10 or lower. We think that this makes any insurer at least worth considering as a value stock. Of this group, Cigna stands out as recording impressive revenue and earnings growth in its most recent quarter versus a year earlier, though certainly some of that growth is due to a recent acquisition and Cigna’s organic growth potential should be evaluated further before concluding that it is particularly attractive. Besides that, earnings growth in the industry has tended to be very limited, generally within 5% of its levels a year ago.

We like UnitedHealth’s valuation, along with that of many other insurers, in any case. Given the insider purchase worth over $100,000 and the confidence that should signify, we would lean towards considering UnitedHealth a good value and we think that investors should do more research on the company. If investors pass on UnitedHealth for reasons other than a general dislike of health insurance companies as investments, they would then be well served to consider peers in the industry.

Disclosure: I own no shares of any stocks mentioned in this article.