By Rob Otman
Cigna (NYSE: CI) is a large cap company that operates within the healthcare providers and services industry. Its market cap is $45 billion today, and the total one-year return is 36.46% for shareholders.
Cigna stock is beating the market, and it reports earnings on Friday. But does that make it a good buy today? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Cigna reported a recent EPS growth rate of 14.71%. That’s below the healthcare providers and services industry average of 40.65%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the healthcare providers and services industry is 68.12. And Cigna’s ratio comes in at 20.03. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for Cigna stock is 33.34%. That’s below the healthcare providers and services industry average of 70.09%. The company is less leveraged.
✓ Free Cash Flow per Share Growth: Cigna’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✓ Profit Margins: The profit margin of Cigna comes in at 5.78% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Cigna’s profit margin is above the healthcare providers and services average of 4.51%. So that’s a positive indicator for investors.
✓ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Cigna is 14.47%, and that’s above its industry average ROE of 14.38%.
Cigna stock passes five of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Strong Buy.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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