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Cigna (CI) Hikes Buyback Authorization, Boosts Shareholder Value

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Cigna Corporation’s (CI - Free Report) board of directors recently authorized an increase to its existing share repurchase program in a bid to return more value to shareholders. To this effect, the global health services company has inked accelerated stock repurchase agreements (the "ASR Agreements") with Morgan Stanley & Co. LLC and JPMorgan Chase Bank, N.A. as a result of which Cigna is entitled to buy back common shares worth $2 billion.

The latest authorization will result in the company receiving around 7.7 million shares in return of prepayment of $2 billion.

Cigna boasts of an impressive history when it comes to rewarding shareholders via share buybacks. Time and again, the company keeps on enhancing its buyback authority. Prior to the latest increase, Cigna’s buyback program was increased by $2 billion in July 2021. The company had hiked it by same amount in July and December of last year as well. Several other enhancements have also been made over the past few years.

In the first half of 2021, the company bought back 16.3 million shares worth roughly $3.7 billion. As of Aug 4, 2021, the company has around $3.8 billion remaining under its existing buyback program.

Continued share buybacks clearly hint toward the company’s sound capital position and its longstanding commitment to return substantial capital to shareholders. At a time when most companies temporarily suspended their share buyback programs, Cigna continued to pursue share buybacks amid the COVID-19 induced volatilities inflicted across 2020.

Besides share repurchases, Cigna remains committed to boosting shareholder value through dividend payments. This year, the company declared its first-quarter dividend for the first time. Previously the company used to declare dividends only once a year. However, it resorted to paying dividends each in the second and third quarter of this year. This year, the company raised its dividend significantly from 4 cents per share to $1.00. Its dividend yield of 1.9% compares favorably with the industry’s figure of 1.2%.

These initiatives highlight the operational and financial strength of the company. Cigna’s management remains optimistic about rewarding shareholders to the tune of over $7 billion in 2021 on the back of robust share buybacks and a significant uptick in dividend.

A robust financial position driven by a strong balance sheet and adequate cash generation capabilities over the years has paved the way for Cigna to undertake growth initiatives, and pursue accelerated and prudent capital deployment measures.

Zacks Rank & Price Performance

Shares of Cigna has gained 21.7% in a year compared with the industry’s rally of 31.4%.

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The stock has a Zacks Rank #4 (Sell).

Stocks to Consider

Some better-ranked stocks in the medical space include The Joint Corp. (JYNT - Free Report) , Acadia Healthcare Company, Inc. (ACHC - Free Report) and Universal Health Services, Inc. (UHS - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Joint Corp., Acadia Healthcare and Universal Health Services have a trailing four-quarter earnings surprise of 235.00%, 26.14% and 29.01%, on average, respectively.

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