The past six months have been a windfall for Oscar Health’s shareholders. The company’s stock price has jumped 97.9%, hitting $32.54 per share. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is now still a good time to buy OSCR? Or are investors being too optimistic? Find out in our full research report, it’s free.
Why Is OSCR a Good Business?
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
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Oscar Health grew its sales at an incredible 48.7% compounded annual growth rate. Its growth beat the average healthcare company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
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.
Oscar 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, Oscar Health’s margin expanded by 23.8 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 28.6%.
Final Judgment
These are just a few reasons why we’re bullish on Oscar Health, and with the recent rally, the stock trades at 17.5× forward P/E (or $32.54 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.
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