Can This Dow Dividend Stock Recover from Disappointing Earnings?

By Michael Douglass and Max Macaluso – Apr 21, 2014 at 6:30PM

NYSE: UNH

UnitedHealth Group

Market Cap

$453B

Today's Change

(-1.98%) -$9.90

Current Price

$491.23

Price as of April 22, 2024, 4:00 p.m. ET

UNH declined substantially on Friday despite a beat on the bottom line and a slight miss on revenue: What happened?

UnitedHealth Group (UNH -1.98%) reported mixed news on earnings last week. Revenue, at $31.7 billion (up about 5% year-over-year), slightly missed analyst estimates, while earnings per share, at $1.10, were down from $1.16 in first quarter 2013.

Management pulled no punches in broadly blaming the Affordable Care Act, also known as Obamacare, for the decline in earnings, with the company announcing that Obamacare and Medicare cuts from the sequester combined to shave $0.35 per share from earnings. There was also some interesting commentary on hepatitis C drugs and the impact of that expense on UNH's earnings.

Both of these are issues that may be generalizable to other insurers, and indeed investors scared by UnitedHealth Group's report sent most insurance stocks down on Friday.

In this video, Motley Fool health care analysts Michael Douglass and Max Macaluso walk through the numbers and consider what the future may hold for this Dow dividend darling.

Max Macaluso, Ph.D. owns shares of Gilead Sciences. Michael Douglass has no position in any stocks mentioned. The Motley Fool recommends Gilead Sciences, Johnson & Johnson, UnitedHealth Group, and WellPoint. The Motley Fool owns shares of Johnson & Johnson and WellPoint. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.