Let’s talk about the popular Elevance Health, Inc. (NYSE:ELV). The company’s shares saw a significant share price movement during recent months on the NYSE, rising to highs of US$496 and falling to the lows of US$436. Some share price movements can give investors a better opportunity to enter the stock, and potentially buy at a lower price. A question to answer is whether Elevance Health’s current trading price of US$439 reflects the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Elevance Health’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Elevance Health
What Is Elevance Health Worth?
Good news, investors! Elevance Health is still a bargain right now according to my price multiple model, which compares the company’s price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 16.73x is currently well-below the industry average of 23.14x, meaning that it is trading at a cheaper price relative to its peers. Another thing to keep in mind is that Elevance Health’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its industry peers, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buyer range again.
Can we expect growth from Elevance Health?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matters most, a more compelling investment theses would be high growth potential at a cheap price. With profits expected to grow by 47% over the next couple of years, the future seems bright for Elevance Health. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? Since ELV is currently below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the multiple current price.
Are you a potential investor? If you’ve been keeping an eye on ELV for a while, now might be the time to make a leap. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ELV. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed assessment.
Diving deeper into the forecasts for Elevance Health mentioned earlier will help you understand how analysts view the stock going forward. Luckily, you can check out what analysts are forecasting by clicking here.
If you are no longer interested in Elevance Health, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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