Profitability is a key measure of business strength. Companies with high margins have proven they can generate consistent earnings while maintaining financial discipline.
Identifying the most compelling profitable companies isn’t always straightforward, and that’s why we started StockStory. That said, here are three profitable companies that leverage their financial strength to beat the competition.
UnitedHealth (UNH)
Trailing 12-Month GAAP Operating Margin: 4.8%
With over 100 million people served across its various businesses and a workforce of more than 400,000, UnitedHealth Group (NYSE:UNH) operates a health insurance business and Optum, a healthcare services division that provides everything from pharmacy benefits to primary care.
Why Do We Like UNH?
- Annual revenue growth of 10.6% over the last five years was above the sector average and underscores its products and services value to customers
- Unparalleled scale of $450.1 billion in revenue enables it to spread administrative costs across a larger membership base
- Industry-leading 19.2% return on capital demonstrates management’s skill in finding high-return investments
UnitedHealth is trading at $387.78 per share, or 18.5x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Elevance Health (ELV)
Trailing 12-Month GAAP Operating Margin: 3.8%
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 Positive on ELV?
- Massive revenue base of $198.7 billion gives it meaningful leverage when negotiating reimbursement rates
- Earnings growth has topped the peer group average over the last five years as its EPS has compounded at 7.2% annually
- Industry-leading 26% return on capital demonstrates management’s skill in finding high-return investments
Elevance Health’s stock price of $418.57 implies a valuation ratio of 14.6x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Texas Pacific Land (TPL)
Trailing 12-Month GAAP Operating Margin: 74.9%
One of America's largest private landowners with roughly 868,000 acres in the Permian Basin, Texas Pacific Land (NYSE:TPL) owns land in West Texas and earns revenue from oil and gas royalties, water services, and land leases.
Why Will TPL Beat the Market?
- Market share has increased this cycle as its 31.1% annual revenue growth over the last ten years was exceptional
- Attractive asset base leads to wonderful unit economics and a best-in-class gross margin of 94.9%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
At $367.72 per share, Texas Pacific Land trades at 27.5x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
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