r/valueinvesting
UNH vs CNC
Author considers trimming health insurance exposure, debating whether to sell laggard UNH for high-flying CNC based on 2026 financials.
- Regulatory scrutiny risk for companies operating as both health insurers and healthcare providers.
Looking for advice on Centene vs United Health. Overall my exposure to US health insurance as a % of total portfolio has grown to a level I’m not comfortable with holding, so I’ve been looking to trim / sell parts of it. However, I’m extremely torn on how to go about this.
For reference, UNH is currently up 35% for me, CNC on the other hand a whopping 125%, so UNH has been the clear laggard in that regard. Overall, I see UNH more stable and I like the dividend, but I do see some (or more) regulatory scrutiny risk with being a health insurance company + health care provider.
If both were still in their through, my choice would be to buy CNC, but the recent run up is the only thing leaving me question if selling UNH for CNC would be a mistake (and if UNH has room to play catch up). Does anybody have any thoughts on the business as a whole between the two?
Overview:
Adjusted EPS Guidance for 2026
UNH: Greater than $18.25 per share (raised following strong Q1 performance)
CNC: Greater than $3.40 per share (raised from initial $3.00 guidance floor)
Expected Revenue for Full-Year 2026
UNH: Over $439.0 Billion (reflecting deliberate business right-sizing)
CNC: $187.5 Billion to $191.5 Billion (with pure premium revenue making up $171.0 Billion to $175.0 Billion)
Medical Ratio (MCR / HBR)
UNH: 88.8% expected full-year average (dropped to 83.9% during Q1)
CNC: 90.9% to 91.7% expected full-year average (dropped to 87.3% during Q1)
Net Margin Profile
UNH: Around 3.6% expected for 2026 (showing strong stability via Optum services)
CNC: Around 1.5% to 2.0% non-GAAP expected (recovering from severe goodwill impairment hits in 2025)
Forward PE Ratio
UNH: Roughly 18x to 20x forward earnings (premium sector multiple for a diversified titan)
CNC: Roughly 14x to 15x forward earnings (deep discount value play)
Price-to-Sales (P/S) Ratio
UNH: Around 1.0x sales
CNC: Around 0.17x sales (significant top-line revenue leverage relative to market cap)
Dividend Yield
UNH: Around 2.2% (consistent dividend growth history)
CNC: 0% (reinvests all free cash flow into buybacks and aggressive debt reduction)
Trademates rates UNH a HOLD with LOW risk. The recent run was defensive rotation and a good FTC settlement, but that DOJ investigation for $8.7B in unsupported diagnoses is real. Triple damages under the False Claims Act would be $25B+. CNC at 0.17x sales is the value play if you can stomach the volatility.
I own UNH and I don't plan to sell, because I bought for the long term. I don't want to pay taxes, and it's a defensive dividend play. I don't expect it to keep going up, but I didn't buy it to trade a few times a year. UNH is a bluechip and is safer in the long term than CNC, and that is why I chose UNH
What about the current DOJ investigations though? I’d say if they weren’t there I’d agree with you, but UNH allegedly pocketed 8.7 billion USD in a single year from unsupported diagnosis. Under the false claim act the government is allowed to pursue 3x the damage suffered by taxpayers, which would be 25+ billion USD. Not saying they will be hit with the full fine, but that, along with PBM settlement with the FTC (which doesn’t prevent private class-action lawsuits from union pension funds, employers, and diabetic patients), could become quite a headwind. Additionally scrutiny in general has been quite high for US health insurers also operating in health services
What percentage are You exposed to health insurance?
I don’t know, but as I said this is a long term hold for me, and You can’t expect to affordably grab some bluechip compaunder without it having some kind of temporary issues.
Both are fine stocks, from what i have seen, cnc is much more volatile (as it is a smaller company) meaning when things are good it can go up more than unh, when it goes down, it drops further. A mix is probably the best strategy.
However, keep in mind that both went >30% up in the last month, i would not expect them to continue to grow significantly further. Unh pe ratio is already close to \~25.