Pick UnitedHealth Stock Or Its Industry Peer – Both Are Likely To Offer Similar Returns

We believe that UnitedHealth stock (NYSE: UNH) and Humana stock (NYSE: HUM), in the healthcare plans industry, will likely give similar returns over the next three years. Although UnitedHealth is trading at a higher valuation of 1.6x trailing revenues, compared to 0.7x for Humana
HUM
, this gap in the valuation is largely justified, given UnitedHealth’s superior profitability, as discussed below.

If we look at stock returns, HUM stock, with 10% returns in 2022, outperformed UNH stock, up 6%, and the broader S&P 500 index, down 20%. There is more to the comparison, and in the sections below, we discuss the possible returns from these stocks in the next three years. We compare a slew of factors, such as historical revenue growth, returns, and valuation, in an interactive dashboard analysis of UnitedHealth vs. Humana: Both Seem Similar Bets. Parts of the analysis are summarized below.