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Why Holding Humana (HUM) in Your Portfolio is a Prudent Move
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Humana, Inc. (HUM - Free Report) is well poised for growth on improved membership, a robust portfolio and strategic measures.
Over the past 30 days, the stock has witnessed 2022 earnings estimate move 0.1% north.
HUM ended 2021 with 17.1 million members under its medical benefit plans and approximately 7.2 million members in its specialty product category.
The leading health insurer has a market cap of $54.57 billion.
HUM is well-poised for progress, evident from its VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
Now delve deeper to see what makes this currently Zacks Rank #3 (Hold) player an investor favorite stock.
The dynamic stock has proved itself time and again. HUM majorly deals with health insurance benefits under Health Maintenance Organization (HMO), Private Fee-For-Service (PFFS) and Preferred Provider Organization (PPO) plans.
Medicaid business has been a driving factor at this leading health insurance company for a while. This robust business line at HUM won contracts in Ohio, which helped it penetrate further in the region. This apart, last month, Humana won a contract from the Louisiana Department of Health to help serve the Medicaid members in the state. HUM has a massive existence in seven states like Oklahoma, South Carolina and Wisconsin, etc. The South Carolina plan is also expected to go live in 2022.
Buyouts have always contributed to its growth strategy. Some massive acquisitions include Family Physicians Group, Your Home Advantage, Curo and a share in Kindred at Home, which helped Humana to deepen its reach in the home health and hospice market. HUM closed nine acquisitions last year. Its iCare buyout aided it to expand its Medicare line of business. In this regard, it should be noted that HUM is the second largest Medicare Advantage plan provider supporting more than 5 million beneficiaries.
Humana bought the remaining 60% shares in Kindred for $5.7 billion from TPG Capital or TPG and Welsh, Carson, Anderson & Stowe or WCAS. All these initiatives help HUM bolster its profile.
HUM’s balance sheet position is also impressive. As of Dec 31, 2021, the health insurer had cash, cash equivalents and investment securities of $16,586, higher than its long-term debt of $10,541 million. To boost shareholder value, HUM has been efficiently deploying capital for the past many years. HUM has an impressive track record of dividend hikes. In February 2022, HUM's board of directors approved a 12.5% increase in its quarterly dividend.On its last earnings call, management said that it remains committed to drive $1 billion of additional value through cost savings, productivity initiatives, etc.
The consensus mark for 2022 earnings stands at $24.12, indicating an upside of 16.9% from the year-ago reported figure.
Shares of HUM have gained 3.4%, underperforming its industry’s growth of 30.7%.
Mednax’s earnings surpassed estimates in each of the last four quarters, the average being 27.99%. The Zacks Consensus Estimate for MD’s 2022 earnings suggests an improvement of 12.9%, while the same for revenues suggests growth of 4.2% from the corresponding year-ago reported figures. The consensus mark for Mednax’s 2022 earnings has moved 7% north in the past 60 days.
The bottom line of Ensign Group outpaced earnings estimates in each of the last four quarters, the average being 1.72%. The Zacks Consensus Estimate for ENSG’s 2022 earnings suggests an improvement of 11.8%, while the same for revenues suggests growth of 12.1% from the respective year-ago reported figures. The consensus mark for 2022 earnings has moved 3% north in the past 60 days. ENSG has a VGM Score of A.
CA-based McKesson Corporation is a health care services and information technology company. MCK has a VGM Score of A and a trailing four-quarter earnings surprise of 20.64%, on average. The Zacks Consensus Estimate for MCK’s 2022 earnings indicates a rise of 38.9% from the year-ago reported figure. The consensus mark has moved 5.7% north in the past 60 days for current-year earnings.
Shares of Mednax and Ensign Group have lost 13.9% and 5.8%, respectively, in a year, while the stock of McKesson has gained 59.2%.
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Why Holding Humana (HUM) in Your Portfolio is a Prudent Move
Humana, Inc. (HUM - Free Report) is well poised for growth on improved membership, a robust portfolio and strategic measures.
Over the past 30 days, the stock has witnessed 2022 earnings estimate move 0.1% north.
HUM ended 2021 with 17.1 million members under its medical benefit plans and approximately 7.2 million members in its specialty product category.
The leading health insurer has a market cap of $54.57 billion.
HUM is well-poised for progress, evident from its VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
Now delve deeper to see what makes this currently Zacks Rank #3 (Hold) player an investor favorite stock.
The dynamic stock has proved itself time and again. HUM majorly deals with health insurance benefits under Health Maintenance Organization (HMO), Private Fee-For-Service (PFFS) and Preferred Provider Organization (PPO) plans.
Medicaid business has been a driving factor at this leading health insurance company for a while. This robust business line at HUM won contracts in Ohio, which helped it penetrate further in the region. This apart, last month, Humana won a contract from the Louisiana Department of Health to help serve the Medicaid members in the state. HUM has a massive existence in seven states like Oklahoma, South Carolina and Wisconsin, etc. The South Carolina plan is also expected to go live in 2022.
Buyouts have always contributed to its growth strategy. Some massive acquisitions include Family Physicians Group, Your Home Advantage, Curo and a share in Kindred at Home, which helped Humana to deepen its reach in the home health and hospice market. HUM closed nine acquisitions last year. Its iCare buyout aided it to expand its Medicare line of business. In this regard, it should be noted that HUM is the second largest Medicare Advantage plan provider supporting more than 5 million beneficiaries.
Humana bought the remaining 60% shares in Kindred for $5.7 billion from TPG Capital or TPG and Welsh, Carson, Anderson & Stowe or WCAS. All these initiatives help HUM bolster its profile.
HUM’s balance sheet position is also impressive. As of Dec 31, 2021, the health insurer had cash, cash equivalents and investment securities of $16,586, higher than its long-term debt of $10,541 million. To boost shareholder value, HUM has been efficiently deploying capital for the past many years. HUM has an impressive track record of dividend hikes. In February 2022, HUM's board of directors approved a 12.5% increase in its quarterly dividend.On its last earnings call, management said that it remains committed to drive $1 billion of additional value through cost savings, productivity initiatives, etc.
The consensus mark for 2022 earnings stands at $24.12, indicating an upside of 16.9% from the year-ago reported figure.
Shares of HUM have gained 3.4%, underperforming its industry’s growth of 30.7%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the medical space are Mednax, Inc. (MD - Free Report) , The Ensign Group, Inc. (ENSG - Free Report) and and McKesson Corporation (MCK - Free Report) . While Mednax sports a Zacks Rank #1 (Strong Buy), Ensign Group and McKesson carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mednax’s earnings surpassed estimates in each of the last four quarters, the average being 27.99%. The Zacks Consensus Estimate for MD’s 2022 earnings suggests an improvement of 12.9%, while the same for revenues suggests growth of 4.2% from the corresponding year-ago reported figures. The consensus mark for Mednax’s 2022 earnings has moved 7% north in the past 60 days.
The bottom line of Ensign Group outpaced earnings estimates in each of the last four quarters, the average being 1.72%. The Zacks Consensus Estimate for ENSG’s 2022 earnings suggests an improvement of 11.8%, while the same for revenues suggests growth of 12.1% from the respective year-ago reported figures. The consensus mark for 2022 earnings has moved 3% north in the past 60 days. ENSG has a VGM Score of A.
CA-based McKesson Corporation is a health care services and information technology company. MCK has a VGM Score of A and a trailing four-quarter earnings surprise of 20.64%, on average. The Zacks Consensus Estimate for MCK’s 2022 earnings indicates a rise of 38.9% from the year-ago reported figure. The consensus mark has moved 5.7% north in the past 60 days for current-year earnings.
Shares of Mednax and Ensign Group have lost 13.9% and 5.8%, respectively, in a year, while the stock of McKesson has gained 59.2%.