The past six months have been a windfall for Oscar Health’s shareholders. The company’s stock price has jumped 86.2%, hitting $27.70 per share. This performance may have investors wondering how to approach the situation.
Is it too late to buy OSCR? Find out in our full research report, it’s free.
Why Are We Positive on OSCR?
Founded in 2012 to simplify the notoriously complex American healthcare system, Oscar Health (NYSE: OSCR) is a technology-focused health insurance company that offers individual and small group health plans through its cloud-native platform.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, Oscar Health’s 49.6% annualized revenue growth over the last five years was incredible. Its growth beat the average healthcare company and shows its offerings resonate with customers.
2. EPS Improving Significantly
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Although Oscar Health’s full-year earnings are still negative, it reduced its losses and improved its EPS by 31.5% annually over the last four years. The next few quarters will be critical for assessing its long-term profitability. An inflection point could be coming soon.
3. Increasing Free Cash Flow Margin Juices Financials
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Oscar Health’s margin expanded by 19.9 percentage points over the last five years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Oscar Health’s free cash flow margin for the trailing 12 months was 21%.
Final Judgment
These are just a few reasons why we think Oscar Health is an elite healthcare company, and with the recent rally, the stock trades at 26.6× forward P/E (or $27.70 per share). Is now a good time to buy despite the apparent froth? See for yourself in our comprehensive research report, it’s free.
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