On Jun 19, 2013, the shares of
) reached a new 52-week high of $85.36. The company's fundamental
strength and strong first-quarter earnings drove the upside.
Humana has a history of generating better-than-expected
operating results. The company witnessed positive earnings
surprise in 8 out of the last 10 quarters.
Further, Humana reported positive earnings surprise in the
last four quarters, with an average beat of 21.2%. On May 1,
2013, the company reported first-quarter 2013 net operating
earnings of $407 million or $2.69 per share. The results
substantially surpassed the Zacks Consensus Estimate of $1.78 as
well as the year-ago earnings of $248 million or $1.49 per
On the same day, Humana raised its earnings guidance for 2013
to $8.40-$8.60 per share from $7.60-$7.80. The Zacks Consensus
Estimate of $8.68 lies above the range, representing a
year-over-year improvement of 24.14%.
Humana expects second-quarter earnings in the range of
$2.40-$2.50 per share. The Zacks Consensus Estimate of $2.44 lies
within this range and represents a year-over-year gain of
Humana has maintained a strong cash and short-term investment
position over the past several years. The company has been
utilizing its excess cash to repurchase shares, pay dividends or
for other corporate purposes. It has also been expanding its
business platform over the last several years.
Moreover, the valuation of Humana looks attractive. The shares
are trading at a discount to its peers both on a price-to-book
and on a forward price-to-earnings basis, while the return on
equity of 15.9% is higher than the peer group average of
13.3%.The year-to-date return from the stock is 21.9%, above
S&P's return of 11.4%.
Humana currently carries a Zacks Rank #3 (Hold). Other health
maintenance organizations worth considering are
Molina Healthcare Inc.
) - Zacks Rank #1 (Strong Buy),
) - Zacks Rank #1 (Strong Buy) and
Health Net Inc.
) - Zacks Rank #2 (Buy).
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