Motley Fool Stock Advisor pick UnitedHealth Group (NYSE:UNH) wowed critics and fans alike on Thursday, beating the quarterly earnings estimates that analysts had set for it and raising its own predictions for full-year 2004 earnings to $3.92 a share.

The company posted fully diluted per-share earnings of $1.04 for its third quarter, a 47% increase over Q3 2003. Revenue also increased, albeit not quite as much, coming in at $9.8 billion for a 36% increase -- which also beat analyst estimates. The company was able to get its profits running faster than its sales by boosting margins both year on year and sequentially. Its solid 11.1% operating margin beat both the 10.5% it posted in Q3 2003 and the 10.9% it posted three months ago.

Fools, of course, place more emphasis on a company's ability to generate true cash profits than generally accepted accounting principles profits. UnitedHealth passed its physical on that score as well, boosting free cash flow by 43% year on year to reach $2.6 billion for the first nine months of 2004. Now, annualize that figure to create its free cash flow run rate for 2004, and the company should rake in somewhere in the neighborhood of $3.5 billion for the year.

When you divide that number into the company's current $44.7 billion market cap, UnitedHealth scores an enterprise value-to-free cash flow ratio of roughly 13. Compare that with the 34 ratio of its better-known but smaller competitor, Aetna (NYSE:AET), and UnitedHealth is looking mighty cheap indeed. The more so when you divide UnitedHealth's EV/FCF by its just-posted 43% growth in free cash flow. That generates a negligible EV/FCF/growth number of 0.30. In other words, ridiculously cheap.

The question, therefore, is how long UnitedHealth can continue to grow its revenues, earnings, and free cash flow at incredible, 40%-ish rates. The answer: not much longer, if it expects anyone to be able to afford its services. So that growth rate simply has to slow down at some point in the future. Just not today.

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Since Tom Gardner first recommended UnitedHealth for Motley Fool Stock Advisor subscribers in the January 2003 issue, it's up 153.25% versus the Standard & Poor's 500's 24.13%. Tom liked the company so much that he re-recommended it in the June 2004 issue, and since then, it's up 17.09% versus the S&P's 0.97%. Want continuing coverage on UnitedHealth or Tom's other market-beating recommendations? Subscribe today for six months, without risk.

Fool contributor Rich Smith owns no interest in any company mentioned in this article.