Key Points
UnitedHealth Group’s share price had a rough July.
The company’s results and outlook disappointed investors.
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UnitedHealth Group (NYSE: UNH) has been in the news over the past several months, but not positively. Unfortunately, the CEO of its healthcare unit, Brian Thompson, was shot and killed late last year. In May, CEO Andrew Witty abruptly resigned, citing personal reasons.
Following the tragedy, people questioned the health insurance unit’s business practices. The company recently confirmed that the Department of Justice has launched criminal and civil investigations into the company’s Medicare billing practices.
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Investors were also disappointed by second-quarter results, which the company reported in late July. While revenue grew 11.8% to $11.6 billion, adjusted earnings per share dropped 40% to $4.08.
The stock price has dropped dramatically, falling about 20% last month. Taking a longer-term look, how would you have fared had you invested $1,000 in UnitedHealth three years ago?
Image source: Getty Images.
Past return
With the recent slide, UnitedHealth Group’s stock price has fallen 53.1% over the past three years through Aug. 5. The company does pay dividends, which it has increased during this time. When factoring in these payments, the shares have a total return of negative 50.8%.
That loss translates into your $1,000 becoming $492. Clearly, that’s disappointing, since no one likes to lose money.
Passive approach
Had you instead placed your money in a broad stock market index like the S&P 500 (SNPINDEX: ^GSPC), you’d have done much better. The index returned 59.5%, before fees, over the last three years. This return means your $1,000 investment would currently be worth $1,595.
While no one has a crystal ball, the exercise does show the importance of doing your research, understanding the risks, and monitoring the companies you own.
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Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.
