On May 22, 2013, shares of
) reached a 52-week high of $79.58. The momentum was driven by
the strong first-quarter earnings of the company, which prompted
a 5.8% gain in the stock price to $73.33 on Apr 24 2013, when the
results were announced, from $69.33 on the previous day.
The share price of this Zacks Rank #2 (Buy) stock has been
strong ever since, with a 12.5% surge till date. WellPoint
reported first-quarter 2013 adjusted income of $2.94 per share,
beating the Zacks Consensus Estimate of $2.37. Adjusted income
also surpassed the year-ago earnings of $2.34 per share by
Operating revenues of WellPoint for the reported quarter were
$17.5 billion, up 15.8% from the year-ago quarter level. The
increase in revenues resulted from the acquisition of Amerigroup,
partly offset by the decline in fully insured Local Group and
Moreover, WellPoint's strong capital and cash position have
fueled cash dividends and stock repurchases. As a result of the
sound financial position, on Feb 21, 2013, the company announced
a 30% hike in its quarterly dividend to 37.5 cents per share,
beginning first quarter 2013, from 28.75 cents paid earlier.
Further, WellPoint repurchased 5.5 million shares for $340.2
million in the first quarter of 2013.
With respect to earnings trend, WellPoint delivered positive
earnings surprise in 3 of the past 4 quarters, with an average of
However, the valuation of WellPoint looks stretched. The
shares are trading at a discount of 13.3% and 45.2%,
respectively, to its peers both on a forward price-to-earnings
basis and price-to-book basis, while the return on equity of
10.7% is 14.4% lower than the peer group average of 12.5%.
Nevertheless, the year-to-date return from the stock was 28%,
much above the S&P's return of 15.7%.
Other health maintenance organizations worth considering are
Molina Healthcare Inc.
) - Zacks Rank #1 (Strong Buy),
) - Zacks Rank #2 (Buy) and
Health Net Inc.
) - Zacks Rank #2 (Buy).
AETNA INC-NEW (AET): Free Stock Analysis
HEALTH NET INC (HNT): Free Stock Analysis
MOLINA HLTHCR (MOH): Free Stock Analysis
WELLPOINT INC (WLP): Free Stock Analysis
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