The Cigna Group (NYSE: CI) has announced an accelerated stock repurchase program, aiming to repurchase $3.2 billion of common stock through agreements with Deutsche Bank AG and Bank of America, N.A. The company's existing share repurchase program had remaining authority of $10.6 billion as of February 13, 2024.
David M. Cordani, Chairman and Chief Executive Officer of The Cigna Group, stated, "This accelerated share repurchase represents a value-enhancing deployment of capital. This is a testament to the ongoing growth and strength of our businesses, and we remain committed to returning significant value to our shareholders and investing in our future. We are on track to repurchase $5 billion of common stock over the first half of 2024, inclusive of this accelerated share repurchase, and continue to expect the majority of discretionary cash flow to be used for share repurchase this year."
Under the terms of the agreements, the company will receive an aggregate initial delivery of approximately 7.6 million shares in exchange for a prepayment of $3.2 billion. The final settlement is expected to occur in the second quarter of 2024 and will be based on the daily volume-weighted average share price of the company's common stock over the term of the agreements, less a discount and subject to adjustments.
The company's shares have moved 0.2%, and are now trading at a price of $339.2.
The full 8-K submission is available here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $48,650 | $153,566 | $160,401 | $174,078 | $180,516 | $189,902 |
| Operating Margins | 9% | 5% | 5% | 5% | 5% | 4% |
| Net Margins | 5% | 3% | 5% | 3% | 4% | 3% |
| Net Income (M) | $2,646 | $5,120 | $8,489 | $5,415 | $6,746 | $5,451 |
| Net Interest Expense (M) | $507 | $1,600 | -$1,438 | -$1,208 | -$1,228 | -$1,410 |
| Depreciation & Amort. (M) | $695 | $3,651 | $2,802 | $2,923 | $2,937 | $3,005 |
| Diluted Shares (M) | 250 | 380 | 368 | 341 | 313 | 297 |
| 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% |
| Avg. Price | $182.13 | $164.0 | $180.93 | $217.69 | $241.67 | $338.93 |
| P/E Ratio | 17.04 | 12.08 | 7.81 | 13.72 | 11.22 | 19.04 |
| Free Cash Flow (M) | $3,242 | $8,435 | $9,256 | $7,191 | $8,656 | $12,445 |
| EV / EBITDA | 17.34 | 8.11 | 8.16 | 9.69 | 9.05 | 11.02 |
| Total Debt (M) | $42,478 | $37,407 | $32,919 | $33,670 | $31,093 | $31,140 |
| Net Debt / EBITDA | 7.96 | 2.8 | 2.08 | 2.63 | 2.22 | 2.02 |
| Current Ratio | 0.64 | 0.74 | 0.77 | 0.83 | 0.73 | 0.73 |
Cigna Corporation's stock is likely undervalued at a price of $339.2 per share due to its strong growth potential. The company's revenues are rapidly growing at a rate of 13.4%, and its earnings per share have grown at an annualized rate of 8.9% over the last 6 years. Additionally, Cigna's PEG ratio is 1.35, indicating that the shares are fairly valued in terms of growth potential. Despite these positive factors, Cigna's operating margins have averaged out to 5.5% over the last 6 years, which is significantly lower than the Medical Specialties industry average of 15.02%.
In terms of value factors, Cigna's total liabilities of $103.88 billion far exceed its current assets of $34.52 billion, resulting in a net current asset level of -$69.36 billion. The company does not have enough current assets to cover its current liabilities, as indicated by a current ratio of 0.73. Furthermore, Cigna is trading above its fair value at its current price of $339.2, with a P/E ratio of 19.1 and a P/B ratio of 2.15. These factors suggest that the stock may not be an attractive investment from a value perspective.
It's important to note that this analysis is not personalized financial advice and investors should conduct thorough research and seek professional guidance before making any investment decisions.
