Novo Nordisk A/S (NVO)vs UnitedHealth Group Incorporated (UNH)

Quick verdict

Novo Nordisk A/S (NVO) and UnitedHealth Group Incorporated (UNH) appeal to different investors. On our six-factor framework, NVO scores 2 and UNH scores 4. UNH looks cheaper on the multiples that matter, while NVO grows faster and NVO earns higher returns on capital. Overall, UNH edges this comparison, but the right pick depends on whether you prioritise value, growth, income or balance-sheet safety.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

Novo Nordisk A/S operates in Drug Manufacturers (Healthcare), while UnitedHealth Group Incorporated sits in Medical - Healthcare Plans (Healthcare). Because both compete in the same sector, this is a direct head-to-head and the financial differences below are especially meaningful. NVO carries a beta of 1.80 versus 0.63 for UNH, meaning NVO has historically been the more volatile of the two.

Valuation

On valuation, UNH is the cheaper stock. NVO trades on a forward P/E of 31.06 and EV/EBITDA of 30.66, against 12.63 and 16.27 for UNH. Price-to-sales is 17.63 vs 0.84, and free-cash-flow yield is 5.8% vs 6.6%. A higher multiple is only justified if the company can sustain faster growth or wider margins, which is exactly what the next sections test.

Growth profile

NVO is the faster grower. NVO has compounded revenue at 13.2% over three years with EPS growth of 10.4%, while UNH has delivered 11.8% revenue and -15.4% EPS growth. Growth like this is the single biggest driver of long-term returns, but it also tends to come with a richer valuation, so it must be weighed against the multiples above.

Profitability and quality

On profitability and quality, NVO is stronger. NVO posts a 12.9% operating margin, 17.3% return on equity and 30.2% return on invested capital. UNH posts 4.8%, 14.4% and 6.8% respectively. Return on invested capital above roughly 15% is a hallmark of a durable competitive advantage, so this metric deserves particular attention.

Balance-sheet risk

UNH has the safer balance sheet. NVO carries net-debt/EBITDA of 4.18x with a current ratio of 2.55, versus -0.27x and 1.24 for UNH. Lower leverage gives a company more room to invest through a downturn and reduces the risk of dilution or distress.

Price performance and shareholder returns

Over the past year NVO returned 76.3% against 65.2% for UNH; on a three-year annualised basis it is 30.4% vs 44.3%. NVO yields 0.0% and UNH yields 2.1%. Past performance never guarantees future results, but the multi-year track record shows how the market has rewarded each business so far.

Which stock fits which investor

For value-oriented investors, UNH is the better fit on today's multiples. Growth investors will likely prefer NVO, which is expanding faster. Income investors should lean toward UNH for its higher shareholder yield, while investors who prize quality-at-a-reasonable-price will favour NVO for its superior returns on capital. This is a comparison of facts, not a recommendation — your time horizon, risk tolerance and existing holdings should drive the final decision.

• Value: UNH
• Growth: NVO
• Income: UNH
• Quality: NVO

Frequently asked questions

Is NVO or UNH the better buy right now?

Neither is universally "better." NVO scores 2 and UNH scores 4 on our six-factor framework. UNH is cheaper, NVO grows faster, and NVO is higher quality — so the right pick depends on your objective.

Which stock is cheaper, NVO or UNH?

UNH is the cheaper stock across forward P/E (31.06 vs 12.63), EV/EBITDA (30.66 vs 16.27) and price-to-sales (17.63 vs 0.84).

Which has grown faster, NVO or UNH?

NVO has the stronger growth profile, with three-year revenue CAGR of 13.2% for NVO versus 11.8% for UNH.

Which stock pays a bigger dividend?

NVO yields 0.0% and UNH yields 2.1%, so UNH is the stronger income choice.

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