On Mar 14, 2013, shares of
) hit a 52-week high of $62.29, driven by the fundamental
strength of the company. This multi-line insurance company
witnessed positive earnings surprise over the last three quarters
with average of 11.7%. Moreover, Cigna delivered positive
earnings surprise in 14 of the past 20
On Feb 7, 2013, the company reported fourth-quarter 2012
earnings of $1.57 per share, surging almost 50% year over year.
Earnings outpaced the Zacks Consensus Estimate of $1.49 per share
Cigna's balance sheet continues to grow with its strong
operating earnings and cash flow generation. Additionally, the
company's recent reinsurance agreement with Berkshire Hathaway
Life Insurance Company of Nebraska has offloaded one of its most
significant liabilities and will allow it to focus on more
important aspects of its business.
Cigna has also made accelerated investments in technology
infrastructure, which is expected to yield efficiency gains in
2013 and beyond.
The company expects to deliver operating earnings of
$1.7-$1.83 billion or $5.85-$6.30 per share in 2013. The Zacks
Consensus Estimate for 20132 is a cent above the company
guidance. It is currently pegged at $6.31, reflecting 5.3% year
over year increase. The long-term expected earnings growth rate
for this stock is 10.1%.
Further, the valuation of Cigna looks reasonable. The shares
are currently trading at a premium to the peer group average both
on price-to-earnings and price-to-book basis. However, its return
on equity of 18.8% is substantially higher than the peer group
average of 6.5%. The 1-year return from the stock is 37.8%, much
above the S&P 500's return of 14.0%.
Cigna currently carries a Zacks Rank #2 (Buy). Other stocks in
the insurance sector that are worth a look are
CNO Financial Group Inc.
Assured Guaranty Ltd.
). All these are Zacks Rank #1 (Strong Buy) stocks.
ASSURED GUARNTY (AGO): Free Stock Analysis
AXA SA -SP ADR (AXAHY): Free Stock Analysis
CIGNA CORP (CI): Free Stock Analysis Report
CNO FINL GRP (CNO): Free Stock Analysis
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