MOH

We rate MOLINA HEALTHCARE, INC. (MOH) as a Reduce with a composite score of 43.1/100 at a current price of $147.82. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in quality (67th percentile) and value (51th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (21th percentile) and investment (30th percentile) tempers our overall conviction. We assign a Narrow Moat rating (47/100), High uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

MOLINA HEALTHCARE, INC. holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 43.1/100 places it at rank #3097 in our full 7,333-stock universe. With a $10.4B market capitalization, MOLINA HEALTHCARE, INC. operates at meaningful scale within the Finance, Insurance, And Real Estate sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 16%, though momentum at the 21th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 14% (-62.0pp vs sector) narrow to operating margins of 3% (-13.8pp vs sector) and net margins of 2.2%, yielding a gross-to-net conversion rate of 15%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $147.82, MOLINA HEALTHCARE, INC. is trading near fair value based on current fundamentals. Our value factor score of 51/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 8.1x (a 32% discount to the sector median of 11.9x), EV/EBITDA of 4.8x (discounted to peers), P/B of 1.9x, P/S of 0.2x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a High uncertainty rating to MOLINA HEALTHCARE, INC.. Key risk factors include significant leverage (283% debt-to-equity), below-average price stability (32th percentile), low beta of -0.01 — while defensive, this may indicate limited upside participation in bull markets. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: significant leverage (283% debt-to-equity); below-average price stability (32th percentile); low beta of -0.01 — while defensive, this may indicate limited upside participation in bull markets; the combination of leverage (283% D/E) and thin margins (2.2% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 32th percentile and quality factor at the 67th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our high uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate MOLINA HEALTHCARE, INC.'s capital allocation as Poor. Key concerns include elevated leverage (283% D/E). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — MOLINA HEALTHCARE, INC. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, MOLINA HEALTHCARE, INC. receives a Reduce rating with a composite score of 43.1/100 (rank #3097 of 7,333). Our quantitative framework assigns a Narrow Moat (47/100, trend: stable), High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 40/100.

Our analysis does not support a constructive view on MOLINA HEALTHCARE, INC. at this time. The combination of the current quantitative profile, high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.