Hello amigos, and greetings from the mountains in the south of México.

I've just completed a valuation for UnitedHealth (UNH-NYSE), but am not all that confident of my numbers, as the NAV, and particularly the EPV valuations seem quite low.  But, as essentially an insurance company, these metrics might be quite different from a manufacturing or retail business...?

I own the stock, and five funds that Witney Tilson calls "Super Investors" initiated or added to their positions in Q1 2008.  The stock was as high as $57.86 in early January, and closed on Thursday at $22.96, after issuing a profit warning earlier in the week and lowering their full year guidance by 16%. 
Morningstar gives the stock 5 stars, and calculates their fair value at $53.  (I came up with $45.50.)

The Wall St. Journal gives the stock a PE of 6.5.  I come up with a normalized PE of 7.7, a M/V of 1.42, and a target B/V of 40% (I calculate they are actually at 46.2%, including op. leases, plus something in their Notes to Financials called "Long Term Supplemental Debt", which, at  $11,047 million, is larger than their balance sheet LT debt of $9,063 million).  I figure a Ks @ 12.1%, a Kb @ 6.9%, and a tax rate of 36.2%.  I wind up with a WACC of 8.5%.  (Morningstar's analyst told me he comes up with WACC of 9.4%, using a 6.5% Kd, and a 10.5% Ks; but I'm not sure how those numbers add up to a 9.4% WACC, even if he's using an unadjusted balance sheet B/V of 31%...)

I figure adjusted NOPLATPA at $5,451 million (assuming normalized EBIT of $6,638 million, plus op. leases of $1,039, minus taxes of $2,779 million, plus amortization of $553 million), and no-growth FCF @ $5,376 million (NOPLATPA plus depreciation of $796 million, minus CAPEX of $871 million); and invested capital @ $35,707 million, for an ROIC of 15.3%.  How am I doing so far?

I come up with an NAV of $6.73, and an EPV of $3.61.  Which puzzles me; shouldn't the EPV be a LOT higher than the NAV in this type of company?

I used financial info from the UNH website, as well as summaries on the Wall Street Journal and Morningstar websites.  Interestingly, they didn't always jive exactly.

Any thoughts or ideas or comments will be most welcome.

Saludos,

Chris.