Molina Healthcare's (MOH, Financial) stock experienced a decline of 5.6% following the release of its first-quarter 2025 results, which did not meet expectations for EBITDA. However, the company reported positive figures for revenue, EPS, and membership growth. The current stock price is $313.4.
The disappointing EBITDA performance can be attributed to increased medical costs, as anticipated. Specifically, the medical care ratio rose to 89.2% due to heightened utilization in long-term care and behavioral health services. These factors resulted in costs exceeding forecasts, particularly affecting the Medicaid and Marketplace segments.
From a valuation perspective, Molina Healthcare currently holds a price-to-earnings (P/E) ratio of 15.13 and a price-to-book (P/B) ratio of 3.9. The company's market capitalization stands at $17,142.94 million. Despite the recent price decline, the stock is considered "modestly undervalued" with a GF Value of $417.12. This suggests room for upside when comparing the current price to the GF Value estimate.
Additionally, Molina Healthcare exhibits strong financial strength with an Altman Z-score of 4.68, which implies low financial risk. The company's Beneish M-Score of -2.12 indicates it is unlikely to be involved in earnings manipulation. With a robust financial health grade of "C" and a profitability grade of "C," the company maintains a solid foothold in the healthcare plans industry.
Despite two medium and two severe warning signs, including a declining gross margin and operating margin over the past few years, Molina Healthcare demonstrates potential for growth. It shows strong financial indicators such as cash-to-debt ratio of 2.88 and interest coverage of 14.47.
Investors should keep an eye on Molina Healthcare's (MOH, Financial) ability to manage costs and maintain growth in its key segments, particularly Medicaid, to align with optimistic revenue and earnings growth forecasts.
