Key Considerations Before Investing in CI Stock

Now trading at a price of $297.43, Cigna has moved 1.1% so far today.

Cigna returned losses of -11.7% last year, with its stock price reaching a high of $336.0 and a low of $240.5. Over the same period, the stock underperformed the S&P 500 index by -34.6%. As of April 2023, the company's 50-day average price was $292.02. The Cigna Group, together with its subsidiaries, provides insurance and related products and services in the United States. Based in Bloomfield, CT, the large-cap Health Care company has 71,300 full time employees. Cigna has offered a 1.6% dividend yield over the last 12 months.

The Business Has Weak Operating Margins:

2018 2019 2020 2021 2022 2023
Revenue (MM) $48,650 $153,566 $160,401 $174,078 $180,516 $189,902
Revenue Growth n/a 215.65% 4.45% 8.53% 3.7% 5.2%
Operating Margins 9% 5% 7% 5% 5% 4%
Net Margins 5% 3% 5% 3% 4% 3%
Net Income (MM) $2,646 $5,120 $8,489 $5,415 $6,746 $5,451
Net Interest Expense (MM) $507 $1,645 -$1,438 -$1,208 -$1,228 -$1,410
Depreciation & Amort. (MM) $695 $3,651 $2,802 $2,923 $2,937 $3,005
Earnings Per Share $10.54 $13.44 $22.96 $15.73 $21.3 $17.61
EPS Growth n/a 27.51% 70.83% -31.49% 35.41% -17.32%
Diluted Shares (MM) 250 380 368 341 313 259
Free Cash Flow (MM) $3,242 $8,435 $10,350 $7,191 $8,656 $12,445
Current Ratio 0.64 0.74 0.77 0.83 0.73 0.73
Total Debt (MM) $92,120 $78,469 $84,425 $90,720 $79,462 $84,260
Net Debt / EBITDA 18.18 6.23 5.43 7.84 6.47 6.76

Cigna has growing revenues and no capital expenditures, positive EPS growth, and irregular cash flows. However, the firm suffers from weak operating margins with a negative growth trend and a highly leveraged balance sheet.

A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:

Cigna has a trailing twelve month P/E ratio of 16.5, compared to an average of 30.21 for the Health Care sector. Based on its EPS guidance of $28.24, the company has a forward P/E ratio of 10.3. According to the 15.1% compound average growth rate of Cigna's historical and projected earnings per share, the company's PEG ratio is 1.09. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 9.6%. On this basis, the company's PEG ratio is 1.71. This suggests that these shares are overvalued. In contrast, the market is likely undervaluing Cigna in terms of its equity because its P/B ratio is 1.91 while the sector average is 4.08. The company's shares are currently trading 11.9% above their Graham number.

Analysts Give Cigna an Average Rating of Buy:

The 21 analysts following Cigna have set target prices ranging from $287.0 to $385.0 per share, for an average of $348.52 with a buy rating. As of April 2023, the company is trading -16.2% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Cigna has a very low short interest because 0.9% of the company's shares are sold short. Institutions own 90.3% of the company's shares, and the insider ownership rate stands at 1.55%, suggesting a large amount of insider shareholders. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $7,417,254,132.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.