Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages. Just because a business is in the green today doesn’t mean it will thrive tomorrow.
A business making money today isn’t necessarily a winner, which is why we analyze companies across multiple dimensions at StockStory. That said, here are two profitable companies that leverage their financial strength to beat the competition and one best left off your watchlist.
One Healthcare Stock to Sell:
ICU Medical (ICUI)
Trailing 12-Month GAAP Operating Margin: 5.1%
Founded in 1984 and named for its initial focus on intensive care units, ICU Medical (NASDAQ: ICUI) develops and manufactures medical products for infusion therapy, vascular access, and vital care applications used in hospitals and other healthcare settings.
Why Do We Think Twice About ICUI?
- Annual sales declines of 1.6% for the past two years show its products and services struggled to connect with the market during this cycle
- Annual earnings per share growth of 2.9% underperformed its revenue over the last five years, showing its incremental sales were less profitable
- Underwhelming 0.9% return on capital reflects management’s difficulties in finding profitable growth opportunities
ICU Medical’s stock price of $125.29 implies a valuation ratio of 14.8x forward P/E. To fully understand why you should be careful with ICUI, check out our full research report (it’s free).
Two Healthcare Stocks to Watch:
Humana (HUM)
Trailing 12-Month GAAP Operating Margin: 1.8%
With over 80% of its revenue derived from federal government contracts, Humana (NYSE: HUM) provides health insurance plans and healthcare services to approximately 17 million members, with a strong focus on Medicare Advantage plans for seniors.
Why Are We Positive On HUM?
- Annual revenue growth of 13.6% over the last two years beat the sector average and underscores the unique value of its offerings
- Massive revenue base of $137.3 billion gives it meaningful leverage when negotiating reimbursement rates
- Exciting sales outlook for the upcoming 12 months calls for 19.4% growth, an acceleration from its two-year trend
Humana is trading at $271.06 per share, or 23.4x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Elevance Health (ELV)
Trailing 12-Month GAAP Operating Margin: 3.9%
Formerly known as Anthem until its 2022 rebranding, Elevance Health (NYSE: ELV) is one of America's largest health insurers, serving approximately 47 million medical members through its network-based managed care plans.
Why Are We Fans of ELV?
- 9.9% annual revenue growth over the last five years was better than the sector average, highlighting the value of its products and services
- Unparalleled scale of $198.3 billion in revenue enables it to spread administrative costs across a larger membership base
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
At $372.50 per share, Elevance Health trades at 14.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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