United Therapeutics Corp (NASDAQ:UTHR) Emerges as a Prime Value Investment Candidate

The search for undervalued companies with solid basic business foundations is a key part of value investing. This method involves finding stocks selling for less than their true worth, often decided by reviewing financial condition, earnings, and expansion possibilities. A "Decent Value" screen uses this idea by selecting for companies with good valuation measures while making sure they are not poor investments by also needing acceptable results in earnings, financial condition, and growth. This method tries to find good businesses that the market might be missing for now.

UNITED THERAPEUTICS CORP (NASDAQ:UTHR) appears as a candidate from this kind of screening process. The biotechnology company, which works on creating treatments for chronic and serious conditions like pulmonary arterial hypertension, shows a financial picture that fits the value investing approach.

Valuation Metrics

For a value investor, a good valuation is the main starting point. It shows a possible difference between the market price and the company's real value. United Therapeutics' valuation picture suggests it is priced carefully compared to its financial results and industry counterparts.

• The company's Price-to-Earnings (P/E) ratio of 17.18 is much lower than the industry average of 62.81, making it less expensive than over 95% of its biotechnology counterparts.
• Its Price-to-Free Cash Flow and Enterprise Value-to-EBITDA ratios are also strong, putting the company in the top group of low-priced stocks in its sector.
• When compared to the wider S&P 500 index, which has a P/E ratio of 27.34, UTHR seems to be trading for less, providing a margin of safety that value investors look for.

Financial Health

A good financial condition score is important to avoid poor investments, companies that are low-priced for a cause, often because of basic financial trouble. United Therapeutics shows outstanding financial strength, which lowers investment risk.

• The company has a flawless balance sheet with no debt, removing interest costs and default risk. This leads to an outstanding Altman-Z score of 19.18, showing a very small chance of bankruptcy.
• Liquidity is solid, with a Current Ratio of 7.26 and a Quick Ratio of 6.94, showing a more than enough ability to pay short-term bills. These ratios are better than most industry rivals.
• The decrease of the debt-to-assets ratio over the last year further shows a careful and improving financial situation.

Profitability Strength

Value investing is not only about buying low-priced stocks, it is about buying good businesses at a fair price. High earnings show a company with a lasting competitive edge and effective operations. United Therapeutics does well on this point.

• The company's Profit Margin of 40.36% and Operating Margin of 50.06% are some of the best in the biotechnology industry, doing better than 98% and 99% of counterparts, in that order.
• Returns on capital are also notable, with a Return on Invested Capital (ROIC) of 16.17% and a Return on Equity (ROE) of 17.31%, both numbers putting the company in the top group of its sector.
• These margins have gotten better over the last few years, pointing to positive operational movement and good management.

Growth Prospects

While low prices can sometimes be found in companies that are not growing, the addition of expansion standards helps find businesses with the possibility for earnings growth, which can be a driver for share price increases. UTHR shows a good growth path.

• The company has provided good historical growth, with Revenue going up by 17.62% over the last year and by 14.71% on average each year over recent years.
• Earnings Per Share (EPS) have grown together, up 17.74% in the past year with an average yearly growth of 16.88%.
• Looking ahead, analysts think this growth will keep going, though at a somewhat slower speed, with expected EPS growth of 13.54% and Revenue growth of 10.10% each year.

The full fundamental analysis report for UNITED THERAPEUTICS CORP gives a detailed look at these measures, providing a closer look for investors doing their own research. The mix of a low valuation, a very strong balance sheet, high earnings, and steady growth makes a strong profile for investors using a value-based plan. It shows a possible chance to buy a high-quality business at a price that may not completely show its long-term earnings ability.

For investors looking for other companies that match this picture, the screening method that found UTHR can be used on the wider market. You can find more results from this "Decent Value" screen here.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The information presented should not be used as the sole basis for making any investment decision. Investors should conduct their own independent research and consult with a qualified financial advisor before making any investment.