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Will Higher Membership, Revenues Aid Cigna (CI) Q3 Earnings?
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Multiline insurer Cigna Corp. (CI - Free Report) is scheduled to release third-quarter earnings on Nov 2, before the opening bell.
The performance should reflect growth in medical customers and specialty relationships, continued effective medical cost management operating expense discipline and strong capital.
Let’s Take a Look at the Factors Influencing Q3 Results
Increase in Membership: Cigna has been witnessing membership growth for the past many quarters. The company ended 2016 with 15.2 million global medical customers, with the addition of approximately 200,000. The trend continued in the first half of 2017, which saw membership increasing by 3%. We expect to see increased membership on growth across all its Commercial market segments, given its diversified product portfolio, a wide agent network and superior service. The Zacks Consensus Estimate for total membership is 15.7 million, up 3.5% year over year.
Higher Revenues from Global Supplemental Business: Earnings and revenues in the segment have been increasing consistently for the past several years, a trend which continued in the first half of 2017. We expect the segment to grow in the third quarter on the back of its leading innovations, direct-to-consumer distribution capabilities, and easy to understand, affordable products that are designed to fill in gaps in coverage and locally licensed and strongly managed talent. The Zacks Consensus Estimate for revenues from this unit is $963 million, up 10.9% year over year.
Higher Premium in Health Care Segment: We expect to see an increase in premium and fees in the company's Health Care segment driven by customer growth and specialty contributions from the Commercial employer group. The Zacks Consensus for the same is pegged at $7.1 billion, up 4.3% year over year.
Share Buyback: The company’s strong business generates sufficient cash flows from operations, which enables it to make strategic mergers and acquisitions, buy back shares and pay dividend. Shares bought back by the company during the third quarter would lift its bottom line.
Our proven model does not conclusively show that Cigna is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Zacks ESP: Cigna has an Earnings ESP of -0.23%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Though Cigna carries a Zacks Rank #2, which increases the predictive power of ESP, its negative ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies worth considering as these possess the right combination of elements to beat estimates this quarter:
NRG Energy, Inc. (NRG - Free Report) has an Earning ESP of +7.92% and a Zacks Rank #3. It will report third-quarter 2017 earnings results on Nov 2.
Cenovus Energy Inc. (CVE - Free Report) has an Earning ESP of 40% and a Zacks Rank #3. It will report third-quarter 2017 earnings results on Nov 2.
More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
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Will Higher Membership, Revenues Aid Cigna (CI) Q3 Earnings?
Multiline insurer Cigna Corp. (CI - Free Report) is scheduled to release third-quarter earnings on Nov 2, before the opening bell.
The performance should reflect growth in medical customers and specialty relationships, continued effective medical cost management operating expense discipline and strong capital.
Let’s Take a Look at the Factors Influencing Q3 Results
Increase in Membership: Cigna has been witnessing membership growth for the past many quarters. The company ended 2016 with 15.2 million global medical customers, with the addition of approximately 200,000. The trend continued in the first half of 2017, which saw membership increasing by 3%. We expect to see increased membership on growth across all its Commercial market segments, given its diversified product portfolio, a wide agent network and superior service. The Zacks Consensus Estimate for total membership is 15.7 million, up 3.5% year over year.
Higher Revenues from Global Supplemental Business: Earnings and revenues in the segment have been increasing consistently for the past several years, a trend which continued in the first half of 2017. We expect the segment to grow in the third quarter on the back of its leading innovations, direct-to-consumer distribution capabilities, and easy to understand, affordable products that are designed to fill in gaps in coverage and locally licensed and strongly managed talent. The Zacks Consensus Estimate for revenues from this unit is $963 million, up 10.9% year over year.
Higher Premium in Health Care Segment: We expect to see an increase in premium and fees in the company's Health Care segment driven by customer growth and specialty contributions from the Commercial employer group. The Zacks Consensus for the same is pegged at $7.1 billion, up 4.3% year over year.
Share Buyback: The company’s strong business generates sufficient cash flows from operations, which enables it to make strategic mergers and acquisitions, buy back shares and pay dividend. Shares bought back by the company during the third quarter would lift its bottom line.
Cigna Corporation Price and EPS Surprise
Cigna Corporation Price and EPS Surprise | Cigna Corporation Quote
Here is what our quantitative model predicts:
Our proven model does not conclusively show that Cigna is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Zacks ESP: Cigna has an Earnings ESP of -0.23%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Though Cigna carries a Zacks Rank #2, which increases the predictive power of ESP, its negative ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies worth considering as these possess the right combination of elements to beat estimates this quarter:
Intercontinental Exchange Inc. (ICE - Free Report) will report third-quarter 2017 earnings results on Nov 2. The company has an Earnings ESP of +0.19% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
NRG Energy, Inc. (NRG - Free Report) has an Earning ESP of +7.92% and a Zacks Rank #3. It will report third-quarter 2017 earnings results on Nov 2.
Cenovus Energy Inc. (CVE - Free Report) has an Earning ESP of 40% and a Zacks Rank #3. It will report third-quarter 2017 earnings results on Nov 2.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>