Back to top

Analyst Blog

On Jun 10, 2013, the shares of WellPoint Inc. (WLP - Analyst Report) reached a 52-week high of $79.78. The momentum was driven by the company’s strong first-quarter results, which included a 24.1% positive surprise.

Further, WellPoint’s leading market position, diversified product portfolio, efficient capital management and strategic acquisitions provide the fundamental strength required to drive share value. With respect to earnings trend, the company delivered positive earnings surprise in 3 of the past 4 quarters, with an average beat of 11.4%.

On Apr 24, 2013, WellPoint reported first-quarter 2013 adjusted income of $2.94 per share, beating the Zacks Consensus Estimate of $2.37. Adjusted income also surpassed the year-ago earnings of $2.34 per share by 25.6%.

Operating revenues of WellPoint for the reported quarter were $17.5 billion, up 15.8% from the year-ago quarter. Revenues, however, lagged the Zacks Consensus Estimate of $18.0 billion. The increase in revenues resulted from the acquisition of Amerigroup, partly offset by the decline in fully insured Local Group and Senior membership.

Additionally, WellPoint announced a 30% hike in its quarterly dividend to 37.5 cents per share on Feb 21, 2013. The company spent $2.9 billion on share repurchases and dividends in 2012, while it expects to deploy about $2 billion for the same in 2013.

However, the valuation of WellPoint looks reasonable. The shares are trading at a discount of 11.9% and 44% to its peers on a forward price-to-earnings basis and price-to-book basis, respectively, while the return on equity of 10.7% is 14.4% lower than the peer group average of 12.5%. Nevertheless, the year-to-date return from the stock was 30.6%, much above the S&P’s return of 15.2%.

WellPoint currently carries a Zacks Rank #2 (Buy). Other health maintenance organizations worth considering are Molina Healthcare Inc. (MOH - Analyst Report) – Zacks Rank #1 (Strong Buy), Aetna Inc. (AET - Analyst Report) – Zacks Rank #2 (Buy) and Health Net Inc. (HNT - Analyst Report) – Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%