Since April 2021, the S&P 500 has delivered a total return of 68.6%. But one standout stock has more than doubled the market - over the past five years, United Therapeutics has surged 186% to $583.82 per share. Its momentum hasn’t stopped as it’s also gained 34.7% in the last six months, beating the S&P by 29.4%.
Following the strength, is UTHR a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Are We Positive On United Therapeutics?
Founded by a mother seeking treatment for her daughter's pulmonary arterial hypertension, United Therapeutics (NASDAQ: UTHR) develops and commercializes medications for chronic lung diseases and other life-threatening conditions, with a focus on pulmonary hypertension treatments.
1. Long-Term Revenue Growth Shows Strong Momentum
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, United Therapeutics grew its sales at a solid 16.5% compounded annual growth rate. Its growth surpassed the average healthcare company and shows its offerings resonate with customers.
2. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
United Therapeutics has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the healthcare sector, averaging an eye-popping 34.2% over the last five years.
3. New Investments Bear Fruit as ROIC Jumps
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, United Therapeutics’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.
Final Judgment
These are just a few reasons why we think United Therapeutics is a high-quality business, and with its shares outperforming the market lately, the stock trades at 20.5× forward P/E (or $583.82 per share). Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
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