Elevance Health

Methodology

Elevance Health's managed care business generates relatively predictable earnings from insurance premiums, though medical loss ratios fluctuate with utilization trends. The large-scale health insurance operations provide earnings stability from diversified membership. Fair value works well when normalizing for MLR fluctuations and accounting for mid-single-digit earnings growth from membership expansion and rate increases.

Methodology

Elevance typically trades at PEG ratios between 1.0-1.8x, reflecting solid but unexciting growth in mature managed care markets facing regulatory and competitive pressures. The company's diversified product portfolio and cost management capabilities support steady earnings. PEG works reasonably well given predictable healthcare demand, though regulatory risks add valuation uncertainty.

Methodology

Elevance pays a dividend yielding 1-2% with consistent growth as the business generates substantial free cash flow, making PEGY moderately more attractive than PEG. The company balances dividends with strategic acquisitions and share buybacks. Total return combines modest yield with steady earnings growth from healthcare services expansion.