Molina Healthcare has been treading water for the past six months, recording a small loss of 0.6% while holding steady at $300.
Given the underwhelming price action, is now a good time to buy MOH? Or should investors expect a bumpy road ahead? Find out in our full research report, it’s free.
Why Does MOH Stock Spark Debate?
Founded in 1980 as a provider for underserved communities in Southern California, Molina Healthcare (NYSE: MOH) provides managed healthcare services primarily to low-income individuals through Medicaid, Medicare, and Marketplace insurance programs across 21 states.
Two Positive Attributes:
1. Skyrocketing Revenue Shows Strong Momentum
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, Molina Healthcare’s sales grew at an impressive 19.4% compounded annual growth rate over the last five years. Its growth beat the average healthcare company and shows its offerings resonate with customers. 
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Molina Healthcare’s EPS grew at a spectacular 14.6% compounded annual growth rate over the last five years. This performance was better than most healthcare businesses.
One Reason to be Careful:
Weak Customer Growth Points to Soft Demand
Revenue growth can be broken down into the number of customers and the average spend per customer. Both are important because an increasing customer base leads to more upselling opportunities while the revenue per customer shows how successful a company was in executing its upselling strategy.
Molina Healthcare’s total customers came in at 5.75 million in the latest quarter, and over the last two years, their count averaged 4% year-on-year growth. This performance slightly lagged the sector and suggests that increasing competition is causing challenges in landing new contracts. 
Final Judgment
Molina Healthcare has huge potential even though it has some open questions, but at $300 per share (or 11.9× forward P/E), is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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