Back to top

Analyst Blog

On Apr 15, 2013, shares of Cigna Corp. (CI - Analyst Report) hit a 52-week high of $66.94, driven by the fundamental strength of the company.

Cigna’s balance sheet continues to grow with its strong operating earnings and cash flow generation. Additionally, the company’s recent reinsurance agreement with Berkshire Hathaway Life Insurance Company of Nebraska has offloaded one of its most significant liabilities allowing the company to focus on important aspects of its business. Cigna has also made accelerated investments in technology infrastructure, which are expected to yield efficiency gains in 2013 and beyond.

Further, the valuation of Cigna looks reasonable. The shares are currently trading at a premium to the peer group average on both a price-to-earnings and a price-to-book basis. However, its return on equity of 18.9% is substantially higher than the peer group average of 6.5%.

With respect to earnings trend, Cigna witnessed positive earnings surprises in 3 of the last 4 quarters with an average beat of 7.81%. The company expects to deliver operating earnings of $1.7–$1.83 billion or $5.85–$6.30 per share in 2013.

Moreover, our proven model shows that this multi-line insurance company is likely to beat earnings in the first quarter of 2013 because it has the right combination of a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and Zacks Rank. ESP or Expected Surprise Prediction, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.70%. Cigna currently carries a Zacks Rank #3 (Hold).

Cigna is expected to announce its first-quarter earnings before the closing bell on May 2. The Zacks Consensus Estimate for the company’s first-quarter earnings is currently pegged at $1.43 per share, up 15.54% year over year.

Other stocks in the insurance sector that are worth a look are CNO Financial Group Inc. (CNO - Analyst Report) – Zacks Rank #1 (Strong Buy), Assurant Inc. (AIZ - Analyst Report) – Zacks Rank #2 (Buy) and MetLife Inc. (MET - 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
SYNAPTICS I… SYNA 78.11 +8.14%
CENTURY ALU… CENX 19.88 +5.74%
GREEN PLAIN… GPRE 39.41 +5.12%
PILGRIM'S P… PPC 28.82 +3.08%
THE PANTRY… PTRY 18.41 +2.79%