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Why Is Cigna (CI) Down 2% Since Its Last Earnings Report?

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It has been about a month since the last earnings report for Cigna Corporation (CI - Free Report) . Shares have lost about 2% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is CI due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Cigna Q1 Earnings Top on Higher Enrollment, 2018 View Up

Cigna came up with adjusted earnings per share of $4.11 in first-quarter 2018, beating the Zacks Consensus Estimate of $3.37. Also, earnings grew 48% year over year. Better-than-expected earnings were primarily driven by revenue growth.

Cigna posted revenues of $11.4 billion, which surpassed the Zacks Consensus Estimate of $11 billion.  Revenues grew 9% year over year, led by strong business growth in Cigna's Commercial Healthcare and Global

Supplemental Benefits segments.

Premiums were up 10.4% year over year to $9 billion, while fees increased 8.4% to $1.35 billion.

The company’s medical enrollment grew by 327,000 lives to 16.2 million customers driven by growth in Select, Individual and Middle Market segments.

Total benefits and expenses of $10.16 billion increased 6% year over year, led by higher global health care medical cost and operating expenses.

Global Health Care: Operating revenues of $9.09 billion were up 9.7% year over year, led by continued strong performance of the company’s Commercial Employer business in its targeted markets.

Adjusted operating earnings were $871 million, up 42.8% year over year due to strong medical cost performance, a lower tax rate and favorable prior-year reserve development.

Global Supplemental Benefits: Operating revenues of $1.10 billion were up 21% year over year, reflecting continued business growth and favorable foreign currency effect.

Adjusted operating income increased 51.4% year over year to $112 million, reflecting business growth and gains from expense management.

Global Disability and Life: Operating revenues of $1.12 billion were down 0.4% year over year as premium growth from disability and other was offset by lower premium in Life business.

Adjusted operating income declined 1.5% year over year to $67 million, due to an increase in life insurance claims.

Financial Position

Cigna’s cash and marketable investments were of $2.77 billion as of Mar 31, 2018, down from $2.97 billion as of Dec 31, 2017.

Long-term debt was $5.2 billion as of Mar 31, 2018, almost unchanged from the Dec 31, 2017 level.

2018 Guidance Raised

For 2018, the company expects to earn in the range of $12.85 to $13.25, up from the previous outlook range of $12.40 to $12.90, on a per share basis. Total revenue growth (kept unchanged) is expected to grow in the range of 7% to 8% and medical customers are projected to grow by 0.4 million to 0.5 million lives, from the previous estimate of 0.3 million to 0.5 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter compared to three lower.

Cigna Corporation Price and Consensus

 

Cigna Corporation Price and Consensus | Cigna Corporation Quote

VGM Scores

At this time, CI has a strong Growth Score of A and a grade with the same score on the momentum front. The stock was also allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is equally suitable for value, growth and momentum investors.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise CI has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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