Buying UnitedHealth Before Q4 Earnings? Cost Pressures a Red Flag

UnitedHealth Group Incorporated UNH is set to report fourth-quarter 2025 results on Jan. 27, 2026, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $2.09 per share on revenues of $113.64 billion. Fourth-quarter earnings estimates remained stable over the past week. The bottom-line projection indicates a decrease of 69.3% from the year-ago reported number. However, the Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 12.7%. Image Source: Zacks Investment ResearchFor the current year, the Zacks Consensus Estimate for UnitedHealth’s revenues is pegged at $447.7 billion, implying a rise of 11.9% year over year. However, the consensus mark for current-year earnings per share is pegged at $16.30, implying a plunge of 41.1% on a year-over-year basis.UnitedHealth beat the consensus estimate for earnings in two of the last four quarters and missed twice, with the average surprise being negative 2.3%. This is depicted in the figure below.UnitedHealth Group Incorporated Price and EPS Surprise UnitedHealth Group Incorporated price-eps-surprise | UnitedHealth Group Incorporated QuoteQ4 Earnings Whispers for UNHOur proven model does not conclusively predict an earnings beat for the company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat, but that’s not the case here.UNH currently has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.You can see the complete list of today’s Zacks #1 Rank stocks here.What’s Shaping UNH’s Q4 Results?The Zacks Consensus Estimate for premium revenues for the fourth quarter indicates 16.4% year-over-year growth, whereas our model estimate suggests a 15.2% increase. Higher contributions from the UnitedHealthcare division are expected to have supported premium growth.The Zacks Consensus Estimate for UnitedHealthcare’s total domestic commercial customers suggests 1% year-over-year growth, whereas our estimate implies a 1.1% gain. The consensus mark for Medicare Advantage members indicates an 8.3% year-over-year rise. The same for Medicaid memberships implies a 1.8% increase from the year-ago level. These are likely to have pushed total memberships in the domestic market up from the year-ago period. The consensus estimate implies around 2% growth year over year.UNH's fourth-quarter top-line performance is expected to have been enhanced by a rise in service revenues. The consensus estimate implies a 1.8% increase in total service revenues. Similarly, the Zacks Consensus Estimate for product revenues indicates a 2.9% increase.However, rising medical costs, as utilization continues to grow, are expected to have elevated UnitedHealth’s overall expenses in the quarter. This is expected to have affected margins, making an earnings beat uncertain this time around. Our model estimate for total operating costs indicates a nearly 18% increase from the prior-year period.The Zacks Consensus Estimate for UNH’s medical care ratio is pegged at 92.2%, up from 85.5% in the year-ago quarter. Our estimate for medical costs indicates 21.2% year-over-year increase.The Zacks Consensus Estimate for operating income from the Optum business segment suggests a 36.6% year-over-year decrease. Meanwhile, the Zacks Consensus Estimate for operating income from UnitedHealthcare indicates a 90.9% year-over-year plunge.UNH’s Price Performance & ValuationUnitedHealth's stock has lost 33.1% in the past year compared with the industry’s fall of 29.2%. Its peers, such as Humana Inc. HUM and Molina Healthcare, Inc. MOH, have decreased 5% and 35.7%, respectively, during this time. The S&P 500 has gained 14.1% during the same period.1-Year Price Performance – UNH, HUM, MOH, Industry & S&P 500 Image Source: Zacks Investment ResearchNow, let’s look at the value UnitedHealth offers investors at current levels.Despite the decline in share price, UNH is trading at 19.56X forward 12-month earnings, above the industry’s average of 15.81X. In comparison, Humana and Molina Healthcare are currently trading at 21.57X and 14.13X, respectively. Image Source: Zacks Investment ResearchHow Should You Play UNH Stock Now?UnitedHealth’s stock has suffered a punishing year, sharply underperforming both its industry and the broader market. Escalating medical costs, higher utilization, regulatory scrutiny and policy uncertainty have weighed heavily on investor confidence, squeezing profitability and clouding near-term visibility. Yet, the outlook may not be entirely bleak.The return of former CEO Stephen Hemsley in May 2025, coupled with his personal stock purchase of more than $25 million, sends a strong signal of management conviction. Adding to that confidence, Berkshire Hathaway’s $1.57 billion investment suggests long-term value investors see opportunity emerging, even if a turnaround is far from guaranteed.The upcoming earnings report will be a critical test. Investors will closely track medical care ratio trends, enrollment momentum and operating margins, with management’s 2026 guidance likely setting the stock’s direction. Elevated MCR remains the central challenge, steadily eroding margins, while membership growth has been uneven, particularly within Medicare Advantage. With margins under pressure in 2025 and only expected to stabilize in 2026, patience appears warranted until earnings provide clearer evidence that costs are moderating and visibility into 2026 is improving.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report Humana Inc. (HUM): Free Stock Analysis Report Molina Healthcare, Inc (MOH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks