Elevance Health Stock Stumbles: Why a 34% Plunge Has Shareholders Questioning its Long-Term Value

Despite five years of steady earnings growth, Elevance Health (NYSE:ELV) has sharply underperformed the market, leaving investors with steep recent losses and raising concerns about the company’s trajectory.

INDIANAPOLIS, IN – Shareholders of Elevance Health, Inc. are facing a challenging period as the health insurance giant’s stock continues to lag. The company’s share price has tumbled 18% in the last quarter alone, contributing to a painful 34% decline over the past twelve months. This performance stands in stark contrast to the broader market, which has seen significant gains.

While long-term investors have seen some growth, the five-year return of 36% is a figure that fails to impress when compared to the S&P 500’s staggering 101% return over the same period. This significant underperformance is now forcing a deeper look into the company’s fundamentals.

Earnings Growth Fails to Ignite Shareholder Returns

A closer examination of Elevance Health’s underlying business reveals a story of steady, yet uninspiring, growth. The company has achieved a compound annual growth rate in its earnings per share (EPS) of 6.9% over the last five years. Interestingly, this figure is closely mirrored by the stock’s average annual price increase of 6% during that time.

This alignment suggests that the market has been rationally pricing the stock based on its earnings performance, rather than speculative hype. However, it also highlights that the company’s fundamental growth has not been robust enough to compete with the returns available elsewhere in the market.

Dividends Provide a Small Cushion

For patient investors, dividends have provided some solace. When factoring in reinvested dividends, Elevance Health’s total shareholder return (TSR) over the last five years climbs to 45%. While this is an improvement over the share price return alone, it still falls dramatically short of the market average.

The recent performance is even more concerning. Over the past year, shareholders have absorbed a 33% loss, even with dividends included, while the market itself climbed 15%.

A Crossroad for Investors: Opportunity or Warning Sign?

The sharp sell-off has placed investors at a crossroads. Is this an opportunity to buy into a fundamentally stable company at a discount, or is it a warning sign of deeper issues?

While stable EPS growth provides a foundation, the stock’s inability to keep pace with the market raises critical questions about its competitive position and future growth prospects. Adding to the caution, recent analysis has identified at least one warning sign associated with Elevance Health that warrants careful consideration as part of any investment process.

For now, the market’s verdict is clear: while Elevance Health continues to grow its earnings, it has not been enough to satisfy investors or shield them from significant recent losses.