United Health Group Inc. (UNH)

[Uncle Henry]

I think that UNH has a great business base...but the slump in sales (along with the horrible and ongoing management issues) has me sitting on my hands. I'm looking at a MOS of 25.83 and the current price is $30.12. Have you guys seem anything credible that would lead one to believe that: 1) UNH now has some/any new and inspired management; or 2) UNH is not on a sales spiral downward?

[The Otter]

I would think UNH's numbers would get worse over the next year. A tougher environment for health insurance policy sales should present itself. Higher unemployment = less revenues. Also as each company engages in increased cost controls they may reduce the coverage previously purchased. I could go on, but you see my point.

[madduxcy4]

I'm curious as to where the MOS numbers are coming from. On MSN, there is no historical P/E (listed as "N/A"). If you take 2x the EPS growth rate (per R1), my MOS is in the low 20's as well. However, the current P/E on MSN is 8.7, which reduces the MOS significantly (to approx. $9). If someone does have the historical P/E, I suppose the earlier number is defensible (and I would like to know from where, as I see "N/A" quite often on MSN). However, if we are using 2x EPS growth as a default, when the current is significantly lower, that could be a recipe for disaster. In addition, when the CEO has that much smoke (ie. pricing of stock options), it seems sketchy at best, regardless of the good numbers.

Too many "what if's" for my taste...

[joshuat]

madduxcy4, msn isn't exactly a reliable source of data. Historical PEs for UNH run from a low of 15 (2007) to a high of 28.3 (1996). I can't be bothered to calculate it, but the average must be a bit above 20.

Not that that matters to me, I think PE is a crazy way to value a business.