What a time it’s been for Clover Health. In the past six months alone, the company’s stock price has increased by a massive 74.4%, reaching $4.61 per share. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is now still a good time to buy CLOV? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free.
Why are we positive on CLOV?
Founded in 2014 to improve healthcare for America's seniors through technology, Clover Health (NASDAQ: CLOV) provides Medicare Advantage plans for seniors with a focus on affordable care and uses its proprietary Clover Assistant software to help physicians manage patient care.
1. Skyrocketing revenue shows strong momentum
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Clover Health grew its sales at an excellent 21.2% compounded annual growth rate. Its growth surpassed 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.
Clover Health’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.
3. Increasing free cash flow margin juices financials
Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, Clover Health’s margin expanded by 11.6 percentage points over the last five years. Clover Health’s free cash flow margin for the trailing 12 months was 3%.
Final judgment
These are just a few reasons why Clover Health ranks highly on our list, and after the recent surge, the stock trades at 30.4× forward P/E (or $4.61 per share). Is now the time to buy despite the apparent froth? See for yourself in our full research report, it’s free.
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