Clover Health has been on fire lately. In the past six months alone, the company’s stock price has rocketed 92.7%, setting a new 52-week high of $5.01 per share. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Is now still a good time to buy CLOV? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free.
Why Is Clover Health a Good Business?
Founded in 2014 to improve healthcare for America's seniors through technology, Clover Health (NASDAQ: CLOV) provides Medicare Advantage plans for seniors with a focus on affordable care and uses its proprietary Clover Assistant software to help physicians manage patient care.
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, Clover Health grew its sales at an exceptional 25.6% compounded annual growth rate. Its growth surpassed the average healthcare company and shows its offerings resonate with customers.
2. Adjusted Operating Margin Rising, Profits Up
Adjusted operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D. It also removes various one-time costs to paint a better picture of normalized profits.
Clover Health’s adjusted operating margin rose by 25.6 percentage points over the last five years, as its sales growth gave it operating leverage. Although its adjusted operating margin for the trailing 12 months was negative 2.6%, we’re confident it can one day reach sustainable profitability.
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, Clover Health’s margin expanded by 14 percentage points over the last five years. Clover Health’s free cash flow margin for the trailing 12 months was 2.5%.
Final Judgment
These are just a few reasons why we’re bullish on Clover Health, and after the recent surge, the stock trades at 55.6× forward P/E (or $5.01 per share). Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
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