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Omar Venerio
Omar Venerio
Articles (1736) 

Wednesday Morning Market Highlights

Markets up, shares of UnitedHealth fall despite earnings beat

US Markets

U.S. stocks were in the green on Wednesday morning ahead of the inauguration of Joe Biden as the 46th President, with the first hours of work advocated to take action against the pandemic. The Dow gained 0.75% to 31,161, the S&P 500 index jumped 1.14% to 3,842 and the Nasdaq Composite Index was up 1.74%, to 13,429.

Gainers

• Invesco Ltd (NYSE:IVZ) +7%

• Ford Motor Co (NYSE:F) +5.2%

• Carmax Inc (NYSE:KMX) +5.1%

• ServiceNow Inc (NYSE:NOW) +3.1%

• Under Armour Inc (NYSE:UA) +2.2%

Losers

• The J M Smucker Co (NYSE:SJM) -2.4%

• Kellogg Co (NYSE:K) -2%

• Kroger Co (NYSE:KR) -1.9%

• Molson Coors Beverage Co (NYSE:TAP) -1.7%

Global Markets

The main European stock markets traded mostly in the green. The U.K.'s FTSE 100 gained 0.35%, France's CAC 40 jumped 0.58%, Germany's Dax advanced 0.79% and Spain's Ibex 35 retreated 0.24%.

In Asia, Japan's Nikkei 225 fell 0.38%, India's BSE Sensex gained 0.80%, Hong Kong's Hang Seng rose 1.08% and China's Shanghai Composite was up 0.47%.

UnitedHealth releases earnings report

Shares of UnitedHealth Group Incorporated (NYSE:UNH) fell more than 0.5% on Wednesday morning after the company announced financial results for its fourth quarter of fiscal 2020. The company posted earnings per share of $2.52, beating analysts' estimates by 13 cents, on revenue of $65.47 billion, which grew 7.5% year-over-year and beat expectations by $490 million.

CEO David S. Wichmann had the following to say:

"We are grateful for the human spirit and resolve of our people, including our 125,000 clinicians who, with other frontline health care workers, demonstrated extraordinary collaboration, compassion and innovation."

For the full year 2020, earnings from operations increased $2.7 billion, or 13.8%, to $22.4 billion. The medical care ratio of 79.1% declined from 82.5% in the previous year and the operating cost ratio reached 16.2%, higher than 14.5% in 2019. Further, cash flows from operations were $22.2 billion, an increase of 20.1% year-over-year.

In the fourth quarter, earnings from operations were $396 million, while the operating margin was 0.8%.

Looking ahead to 2021, the company affirmed its full year earnings outlook, with net earnings predicted to fall in the range of $16.90 to $17.40 per share and adjusted net earnings expected to be between $17.75 and $18.25 per share.

The stock has gained almost 2% so far this year versus the S&P 500's gain of 2.6%.

At the end of September, Mario Gabelli (Trades, Portfolio) boosted his investment in the stock by 4% to 28,194 shares and First Eagle Investment (Trades, Portfolio) opened a new position with 88,276 shares. Chris Davis (Trades, Portfolio) reduced his position in the stock by 2% to 197,027 shares.

Disclosure: The author holds no positions in any stocks mentioned.

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About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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