Cigna Corp Valuation – January 2019 $CI

Company Profile (excerpt from Reuters): Cigna Corporation (Cigna), incorporated on November 3, 1981, together with its subsidiaries, is a health services company. The Company offers medical, dental, disability, life and accident insurance and related products and services. The Company’s segments include Global Health Care, Global Supplemental Benefits, Group Disability and Life, and Other Operations and Corporate. The Company’s products are offered through employers and other groups, such as Governmental and non-Governmental organizations, unions and associations. Cigna also offers commercial health and dental insurance, Medicare and Medicaid products and health, life and accident insurance coverages to individuals in the United States and international markets. The Company’s other business operations include corporate-owned life insurance business (COLI), run-off reinsurance and settlement annuity businesses.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CI – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $73,825,240,499 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 98.78% Pass
5. Moderate PEmg Ratio PEmg < 20 20.83 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.07 Fail
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $9.31
MG Growth Estimate 8.13%
MG Value $230.49
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $134.96
MG Value based on 0% Growth $79.11
Market Implied Growth Rate 6.17%
Current Price $193.88
% of Intrinsic Value 84.12%

Cigna Holding Co is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $6.04 in 2014 to an estimated $9.31 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 6.17% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Cigna Holding Co revealed the company was trading above its Graham Number of $122.31. The company pays a dividend of $0.04 per share, for a yield of 0% Its PEmg (price over earnings per share – ModernGraham) was 20.83, which was below the industry average of 30.63, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Cigna Holding Co receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Graham Number $122.31
PEmg 20.83
PB Ratio 3.07
Dividend Yield 0.02%
TTM Dividend $0.04
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Long-Term Debt & Capital Lease Obligation $25,041,000,000
Total Assets $82,956,000,000
Intangible Assets $6,129,000,000
Total Liabilities $67,401,000,000
Shares Outstanding (Diluted Average) 246,112,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $11.81
Dec2017 $8.77
Dec2016 $7.19
Dec2015 $8.04
Dec2014 $7.83
Dec2013 $5.18
Dec2012 $5.61
Dec2011 $4.59
Dec2010 $4.65
Dec2009 $4.73
Dec2008 $1.05
Dec2007 $3.87
Dec2006 $3.43
Dec2005 $4.17
Dec2004 $3.48
Dec2003 $1.50
Dec2002 -$1.06
Dec2001 $2.08
Dec2000 $1.95
Dec1999 $3.00
Dec1998 $2.02

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $9.31
Dec2017 $7.84
Dec2016 $7.17
Dec2015 $6.86
Dec2014 $6.04
Dec2013 $5.08
Dec2012 $4.72
Dec2011 $4.11
Dec2010 $3.77
Dec2009 $3.37
Dec2008 $2.86
Dec2007 $3.60
Dec2006 $3.08
Dec2005 $2.62
Dec2004 $1.75
Dec2003 $1.09
Dec2002 $1.12

Recommended Reading:

Other ModernGraham posts about the company

Cigna Corp Valuation – March 2018 $CI
5 Undervalued Companies for Value Investors with a Low Beta – December 2016
5 Undervalued Companies for Value Investors with a Low Beta – September 2016
5 Undervalued Companies for the Defensive Investor Near 52 Week Lows – August 2016
5 Undervalued Companies with a Low Beta – August 2016

Other ModernGraham posts about related companies

MetLife Inc Valuation – January 2019 $MET
Aflac Inc Valuation – January 2019 $AFL
Principal Financial Group Inc Valuation – January 2019 $PFG
Progressive Corp Valuation – January 2019 $PGR
Lincoln National Corp Valuation – January 2019 $LNC
Cincinnati Financial Corp Valuation – January 2019 $CINF
Aon PLC Valuation – November 2018 $AON
Travelers Companies Inc Valuation – November 2018 $TRV
Stewart Information Services Corp Valuation – August 2018 $STC
Kemper Corp Valuation – August 2018 $KMPR

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Cigna Corp Valuation – March 2018 $CI

Company Profile (excerpt from Reuters): Cigna Corporation (Cigna), incorporated on November 3, 1981, together with its subsidiaries, is a health services company. The Company offers medical, dental, disability, life and accident insurance and related products and services. The Company’s segments include Global Health Care, Global Supplemental Benefits, Group Disability and Life, and Other Operations and Corporate. The Company’s products are offered through employers and other groups, such as Governmental and non-Governmental organizations, unions and associations. Cigna also offers commercial health and dental insurance, Medicare and Medicaid products and health, life and accident insurance coverages to individuals in the United States and international markets. The Company’s other business operations include corporate-owned life insurance business (COLI), run-off reinsurance and settlement annuity businesses.

CI Chart

CI data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CI – March 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $40,106,450,920 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 97.64% Pass
5. Moderate PEmg Ratio PEmg < 20 17.72 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.92 Fail
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $9.25
MG Growth Estimate 8.00%
MG Value $226.71
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $134.18
MG Value based on 0% Growth $78.66
Market Implied Growth Rate 4.61%
Current Price $164.00
% of Intrinsic Value 72.34%

CIGNA Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PB ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $6.04 in 2014 to an estimated $9.25 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.61% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into CIGNA Corporation revealed the company was trading above its Graham Number of $121.48. The company pays a dividend of $0.04 per share, for a yield of 0% Its PEmg (price over earnings per share – ModernGraham) was 17.72, which was below the industry average of 22.76, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

CIGNA Corporation performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $121.48
PEmg 17.72
PB Ratio 2.92
Dividend Yield 0.02%
TTM Dividend $0.04
Number of Consecutive Years of Dividend Growth 0

Useful Links:

 

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Long-Term Debt & Capital Lease Obligation $5,199,000,000
Total Assets $61,753,000,000
Intangible Assets $6,655,000,000
Total Liabilities $48,018,000,000
Shares Outstanding (Diluted Average) 244,628,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $11.65
Dec2017 $8.77
Dec2016 $7.19
Dec2015 $8.04
Dec2014 $7.83
Dec2013 $5.18
Dec2012 $5.61
Dec2011 $4.59
Dec2010 $4.65
Dec2009 $4.73
Dec2008 $1.05
Dec2007 $3.87
Dec2006 $3.43
Dec2005 $4.17
Dec2004 $3.48
Dec2003 $1.50
Dec2002 -$1.06
Dec2001 $2.08
Dec2000 $1.95
Dec1999 $3.00
Dec1998 $2.02

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $9.25
Dec2017 $7.84
Dec2016 $7.17
Dec2015 $6.86
Dec2014 $6.04
Dec2013 $5.08
Dec2012 $4.72
Dec2011 $4.11
Dec2010 $3.77
Dec2009 $3.37
Dec2008 $2.86
Dec2007 $3.60
Dec2006 $3.08
Dec2005 $2.62
Dec2004 $1.75
Dec2003 $1.09
Dec2002 $1.12

Recommended Reading:

Other ModernGraham posts about the company

9 Best Stocks For Value Investors This Week – 7/8/16
Cigna Corp Valuation – July 2016 $CI
5 Undervalued Companies with a Low Beta – July 2016
5 Companies for Enterprising Investors Near 52 Week Lows – June 2016
5 Undervalued Companies with a Low Beta – May 2016

Other ModernGraham posts about related companies

Aspen Insurance Holdings Ltd Valuation – March 2018 $AHL
AFLAC Inc Valuation – March 2018 $AFL
MetLife Inc Valuation – March 2018 $MET
Principal Financial Group Inc Valuation – March 2018 $PFG
Progressive Corp Valuation – February 2018 $PGR
Cincinnati Financial Corp Valuation – February 2018 $CINF
Lincoln National Corp Valuation – February 2018 $LNC
Aon PLC Valuation – February 2018 $AON
Travelers Companies Inc Valuation – February 2018 $TRV
Hanover Insurance Group Valuation – Initial Coverage $THG

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Energy Company of Minas Valuation – Initial Coverage $CIG

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – December 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Energy Company of Minas (CIG) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Companhia Energetica de Minas Gerais-CEMIG is a holding company that is engaged in the generation, transmission and distribution of electricity. The Company’s segments include Generation, Transmission, Distribution, Telecom, Gas and Other. The Company, through its interests in subsidiaries or jointly controlled entities, is engaged in the activities of the construction and operation of systems for sale of electricity, as well as various fields of energy and telecommunications, for the purpose of commercial operation. Its electric power transmission business consists of transporting power from the facilities where it is generated to points of consumption, distribution networks and Free Consumers. Its distribution operation consists of transfers of electricity from distribution substations to final consumers. It is also engaged in businesses, such as telecommunications, energy solutions consulting, and acquisition, transport and distribution of gas and its subproducts and derivatives.

CIG Chart

CIG data by YCharts

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CIG – December 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,986,429,672 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.72 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -29.68% Fail
6. Moderate PEmg Ratio PEmg < 20 3.54 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.73 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.72 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -3.35 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg $0.66
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $9.55
MG Value based on 0% Growth $5.60
Market Implied Growth Rate -2.48%
Current Price $2.33
% of Intrinsic Value N/A

Cia Energetica de Minas Gerais CEMIG-ADR does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.23 in 2012 to an estimated $0.66 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 2.48% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Cia Energetica de Minas Gerais CEMIG-ADR revealed the company was trading below its Graham Number of $4.31. The company pays a dividend of $0.1 per share, for a yield of 4.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 3.54, which was below the industry average of 23.36, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.83.

Cia Energetica de Minas Gerais CEMIG-ADR receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$4.83
Graham Number $4.31
PEmg 3.54
Current Ratio 0.72
PB Ratio 0.73
Current Dividend $0.10
Dividend Yield 4.21%
Number of Consecutive Years of Dividend Growth 1

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Useful Links:

ModernGraham tagged articles Morningstar
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GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $2,382,480,000
Total Current Liabilities $3,325,700,000
Long-Term Debt $3,163,238,000
Total Assets $12,483,308,000
Intangible Assets $3,063,347,000
Total Liabilities $8,453,973,000
Shares Outstanding (Diluted Average) 1,258,281,000

Earnings Per Share History

Next Fiscal Year Estimate $0.26
Dec2015 $0.51
Dec2014 $0.94
Dec2013 $1.05
Dec2012 $1.64
Dec2011 $1.04
Dec2010 $1.06
Dec2009 $1.14
Dec2008 $0.58
Dec2007 $0.71
Dec2006 $0.25
Dec2005 $0.63
Dec2004 $0.51
Dec2003 $0.39
Dec2002 $0.00
Dec2001 $0.00
Dec2000 $0.15

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $0.66
Dec2015 $0.92
Dec2014 $1.13
Dec2013 $1.21
Dec2012 $1.23
Dec2011 $0.98
Dec2010 $0.88
Dec2009 $0.75
Dec2008 $0.55
Dec2007 $0.52
Dec2006 $0.40
Dec2005 $0.42
Dec2004 $0.28
Dec2003 $0.15
Dec2002 $0.03
Dec2001 $0.04
Dec2000 $0.05

Recommended Reading:

Other ModernGraham posts about the company

None.  This is the first time ModernGraham has covered the company.

Other ModernGraham posts about related companies

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Public Service Enterprise Group Inc Valuation – August 2016 $PEG
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Ameren Corp Valuation – August 2016 $AEE
PG&E Corp Valuation – July 2016 $PCG
SCANA Corporation Valuation – July 2016 $SCG
Exelon Corporation Valuation – July 2016 $EXC
DTE Energy Co Valuation – July 2016 $DTE

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Cigna Corp Valuation – July 2016 $CI

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – June 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Cigna Corp (CI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cigna Corporation (Cigna), together with its subsidiaries, is a health services company. The Company offers medical, dental, disability, life and accident insurance and related products and services. The Company’s segments include Global Health Care, Global Supplemental Benefits, Group Disability and Life, Other Operations and Corporate. The Global Health Care segment aggregates the commercial and Government operating segments. The Global Supplemental Benefits segment offers supplemental health, life and accident insurance products primarily in Asia, Europe and the United States. The Company’s Global Supplemental Benefits segment offers supplemental health, life and accident insurance products primarily in Asia, Europe and the United States. Its products are offered through employers and other groups, such as Governmental and non-Governmental organizations, unions and associations. Cigna also offers commercial health and dental insurance, and Medicare and Medicaid products and health.

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
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Downloadable PDF version of this valuation:

ModernGraham Valuation of CI – July 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $32,975,542,507 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 159.27% Pass
5. Moderate PEmg Ratio PEmg < 20 16.23 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.60 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

CI value chart July 2016

EPSmg $7.82
MG Growth Estimate 9.25%
MG Value $211.32
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $113.46
MG Value based on 0% Growth $66.51
Market Implied Growth Rate 3.87%
Current Price $127.00
% of Intrinsic Value 60.10%

CIGNA Corporation qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.84 in 2012 to an estimated $7.82 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.87% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

CIGNA Corporation receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

CI charts July 2016

Graham Number $100.89
PEmg 16.23
PB Ratio 2.60
Dividend Yield 0.03%
TTM Dividend $0.04
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Long-Term Debt $4,791,000,000
Total Assets $58,884,000,000
Intangible Assets $6,029,000,000
Total Liabilities $46,209,000,000
Shares Outstanding (Diluted Average) 259,447,000

Earnings Per Share History

Next Fiscal Year Estimate $9.15
Dec2015 $8.04
Dec2014 $7.83
Dec2013 $5.18
Dec2012 $5.61
Dec2011 $4.84
Dec2010 $4.89
Dec2009 $4.73
Dec2008 $1.05
Dec2007 $3.87
Dec2006 $3.43
Dec2005 $4.17
Dec2004 $3.48
Dec2003 $1.58
Dec2002 -$0.94
Dec2001 $2.20
Dec2000 $2.03
Dec1999 $3.00
Dec1998 $2.02
Dec1997 $1.63
Dec1996 $1.54

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $7.82
Dec2015 $6.87
Dec2014 $6.08
Dec2013 $5.16
Dec2012 $4.84
Dec2011 $4.26
Dec2010 $3.85
Dec2009 $3.37
Dec2008 $2.86
Dec2007 $3.61
Dec2006 $3.10
Dec2005 $2.66
Dec2004 $1.82
Dec2003 $1.19
Dec2002 $1.21
Dec2001 $2.25
Dec2000 $2.20

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Companies with a Low Beta – July 2016
5 Companies for Enterprising Investors Near 52 Week Lows – June 2016
5 Undervalued Companies with a Low Beta – May 2016
26 Best Stocks For Value Investors This Week – 2/6/16
Cigna Corp Valuation – January 2016 Update $CI

Other ModernGraham posts about related companies

Progressive Corporation Valuation – June 2016 $PGR
Cincinnati Financial Corporation Valuation – May 2016 $CINF
Lincoln National Corporation Valuation – May 2016 $LNC
Allstate Corporation Valuation – May 2016 $ALL
The Travelers Companies Valuation – May 2016 $TRV
Unum Group Valuation – March 2016 $UNM
Principal Financial Group Inc Valuation – March 2016 $PFG
Assurant Inc Valuation – February 2016 $AIZ
American International Group Inc Stock Valuation – February 2016 $AIG
Chubb Ltd Stock Valuation – February 2016 $CB

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Cigna Corp Valuation – January 2016 Update $CI

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Cigna Corp (CI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cigna Corporation (Cigna), together with its subsidiaries, is a health services company. The Company offers medical, dental, disability, life and accident insurance and related products and services. The Company operates in three segments: Global Health Care, Global Supplemental Benefits and Group Disability and Life. The Global Health Care segment aggregates the commercial and Government operating segments. The Global Supplemental Benefits segment offers supplemental health, life and accident insurance products. The Group Disability and Life segment provides group long-term and short-term disability insurance, group life insurance, accident and specialty insurance and related services. Cigna offers commercial health and dental insurance, Medicare and Medicaid products and health, life and accident insurance coverages to individuals. It offers personal accident insurance coverage, consisting of accidental death and dismemberment and travel accident insurance.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of CI

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $33,444,200,015 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 152.81% Pass
5. Moderate PEmg Ratio PEmg < 20 19.42 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.96 Fail
Score
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

CI value chart January 2016

EPSmg $6.88
MG Growth Estimate 10.08%
MG Value $197.09
Opinion Undervalued
MG Value based on 3% Growth $99.73
MG Value based on 0% Growth $58.46
Market Implied Growth Rate 5.46%
Current Price $133.60
% of Intrinsic Value 67.79%

Cigna Corp qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the high PB ratio.  The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $4.11 in 2011 to an estimated $6.88 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.46% annual earnings loss over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Cigna Corp (CI)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

CI charts January 2016

Graham Number $91.29
PEmg 19.42
PB Ratio 2.96
Dividend Yield 0.03%
Number of Consecutive Years of Dividend Growth 0

 

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Sep2015
Long-Term Debt $5,056,000,000
Total Assets $56,909,000,000
Intangible Assets $6,040,000,000
Total Liabilities $45,135,000,000
Shares Outstanding (Diluted Average) 260,519,000

Earnings Per Share History

Next Fiscal Year Estimate $8.10
Dec2014 $7.83
Dec2013 $5.18
Dec2012 $5.61
Dec2011 $4.59
Dec2010 $4.65
Dec2009 $4.73
Dec2008 $1.05
Dec2007 $3.87
Dec2006 $3.43
Dec2005 $4.17
Dec2004 $3.48
Dec2003 $1.50
Dec2002 -$1.06
Dec2001 $2.08
Dec2000 $1.95
Dec1999 $3.00
Dec1998 $2.02
Dec1997 $1.63
Dec1996 $1.54

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $6.88
Dec2014 $6.04
Dec2013 $5.08
Dec2012 $4.72
Dec2011 $4.11
Dec2010 $3.77
Dec2009 $3.37
Dec2008 $2.86
Dec2007 $3.60
Dec2006 $3.08
Dec2005 $2.62
Dec2004 $1.75
Dec2003 $1.09
Dec2002 $1.12
Dec2001 $2.19
Dec2000 $2.17
Dec1999 $2.07

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Companies with a Low Beta – November 2015
Cigna Corporation Analysis – October 2015 Update $CI
The Best Companies of the Insurance Industry – October 2015
5 Undervalued Companies with a Low Beta – August 2015
5 Undervalued Companies with a Low Beta – July 2015

Other ModernGraham posts about related companies

Aon PLC Valuation – January 2016 Update $AON
Progressive Corp Valuation – November 2015 Update $PGR
Progressive Corp Valuation – November 2015 Update $PGR
Ace Limited Valuation – November 2015 Update $ACE
Travelers Companies Inc. Valuation – November 2015 Update $TRV
Lincoln National Corp Valuation – November 2015 Update $LNC
Unum Group Valuation – November 2015 Update $UNM
Principal Financial Group Valuation – November 2015 Update $PFG
Assurant Inc. Valuation – November 2015 Update $AIZ
American International Group Inc. Valuation – November 2015 Update $AIG

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Cigna Corporation Analysis – October 2015 Update $CI

In the wake of the great financial crisis it can sometimes be difficult for Intelligent Investors to find a solid financial company in which to invest, because they require specific achievements over the historical period.  Many investors may simply decide to throw out the worst years with the rationale that they are outliers that shouldn’t be considered when evaluating the company’s prospects, but doing so would involve speculation.

We don’t know whether the financial crisis will happen again, but we do know that if it does, we can expect to see similar results as we did before.  By continuing to require the same standards for the historical period, Intelligent Investors are able to whittle down banks to only those with the best financial position, and then they are able to determine an intrinsic value to get a sense of whether the company is a good investment.

In addition, a company must have strong financial statements to prove that it is stable enough for Intelligent Investors.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

What follows is a specific look at how Cigna Corporation (CI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cigna Corporation (Cigna), together with its subsidiaries, is a health services company. The Company offers medical, dental, disability, life and accident insurance and related products and services. The Company operates in three segments: Global Health Care, Global Supplemental Benefits and Group Disability and Life. The Global Health Care segment aggregates the commercial and Government operating segments. The Global Supplemental Benefits segment offers supplemental health, life and accident insurance products. The Group Disability and Life segment provides group long-term and short-term disability insurance, group life insurance, accident and specialty insurance and related services. Cigna offers commercial health and dental insurance, Medicare and Medicaid products and health, life and accident insurance coverages to individuals. It offers personal accident insurance coverage, consisting of accidental death and dismemberment and travel accident insurance.
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Downloadable PDF version of this valuation:

ModernGraham Valuation of CI – October 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $35,594,315,428 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 154.49% Pass
5. Moderate PEmg Ratio PEmg < 20 20.15 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.16 Fail
Score
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

CI value Chart October 2015

EPSmg $6.92
MG Growth Estimate 10.25%
MG Value $200.79
Opinion Undervalued
MG Value based on 3% Growth $100.41
MG Value based on 0% Growth $58.86
Market Implied Growth Rate 5.82%
Current Price $139.50
% of Intrinsic Value 69.48%

Cigna Corporation qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the high PEmg and PB ratios while the Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with the next stage of the analysis.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $4.11 in 2011 to an estimated $6.92 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 5.82% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Cigna Corporation (CI)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

CI Charts October 2015

Graham Number $90.20
PEmg 20.15
PB Ratio 3.16
Dividend Yield 0.03%
Number of Consecutive Years of Dividend Growth 0

 

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Long-Term Debt $5,046,000,000
Total Assets $57,132,000,000
Intangible Assets $6,041,000,000
Total Liabilities $45,842,000,000
Shares Outstanding (Diluted Average) 255,730,000

Earnings Per Share History

Next Fiscal Year Estimate $8.24
Dec14 $7.83
Dec13 $5.18
Dec12 $5.61
Dec11 $4.59
Dec10 $4.65
Dec09 $4.73
Dec08 $1.05
Dec07 $3.87
Dec06 $3.43
Dec05 $4.17
Dec04 $3.48
Dec03 $1.50
Dec02 -$1.06
Dec01 $2.08
Dec00 $1.95
Dec99 $3.00
Dec98 $2.02
Dec97 $1.63
Dec96 $1.54
Dec95 $0.32

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $6.92
Dec14 $6.04
Dec13 $5.08
Dec12 $4.72
Dec11 $4.11
Dec10 $3.77
Dec09 $3.37
Dec08 $2.86
Dec07 $3.60
Dec06 $3.08
Dec05 $2.62
Dec04 $1.75
Dec03 $1.09
Dec02 $1.12
Dec01 $2.19
Dec00 $2.17
Dec99 $2.09

Recommended Reading:

Other ModernGraham posts about the company

The Best Companies of the Insurance Industry – October 2015
5 Undervalued Companies with a Low Beta – August 2015
5 Undervalued Companies with a Low Beta – July 2015
The 9 Best Stocks For Value Investors This Week – 7/18/15
Cigna Corporation Analysis – July 2015 Update $CI

Other ModernGraham posts about related companies

The Best Companies of the Insurance Industry – October 2015
Chubb Corporation Analysis – September 2015 Update $CB
Anthem Inc. Analysis – September 2015 Update $ANTM
Aflac Inc. Analysis – September 2015 Update $AFL
Marsh & McLennan Companies Analysis – September 2015 Update $MMC
Berkshire Hathaway Analysis – August 2015 Update $BRK/B
Progressive Corporation Analysis – August 2015 Update $PGR
Ace Limited Analysis – August 2015 Update $ACE
Travelers Companies Analysis – August 2015 Update $TRV
Lincoln National Corporation Analysis – August 2015 Update $LNC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please review our detailed disclaimer.

Cigna Corporation Analysis – July 2015 Update $CI

200px-Cigna_logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – July 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Cigna Corporation (CI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cigna Corporation (Cigna), together with its subsidiaries, is a health services company. The Company offers medical, dental, disability, life and accident insurance and related products and services. The Company operates in three segments: Global Health Care, Global Supplemental Benefits and Group Disability and Life. The Global Health Care segment aggregates the commercial and Government operating segments. The Global Supplemental Benefits segment offers supplemental health, life and accident insurance products. The Group Disability and Life segment provides group long-term and short-term disability insurance, group life insurance, accident and specialty insurance and related services. Cigna offers commercial health and dental insurance, Medicare and Medicaid products and health, life and accident insurance coverages to individuals. It offers personal accident insurance coverage, consisting of accidental death and dismemberment and travel accident insurance.

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Defensive Investor – must pass all 6 of the following tests: Score = 4/6

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  3. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  4. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  5. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  6. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass all 3 of the following tests or be suitable for a defensive investor: Score = 3/3

  1. Earnings Stability – positive earnings per share for at least 5 years – PASS
  2. Dividend Record – currently pays a dividend – PASS
  3. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $153.21
MG Value $202.11
MG Opinion Fairly Valued
Value Based on 3% Growth $100.65
Value Based on 0% Growth $59.00
Market Implied Growth Rate 6.79%
PEmg 22.07
PB Ratio 3.66

Balance Sheet – March 2015

Total Debt $5,062,000,000
Total Assets $58,122,000,000
Intangible Assets $6,029,000,000
Total Liabilities $47,180,000,000
Outstanding Shares 261,200,000

Earnings Per Share

2015 (estimate) $8.29
2014 $7.83
2013 $5.18
2012 $5.61
2011 $4.59
2010 $4.65
2009 $4.73
2008 $1.05
2007 $3.87
2006 $3.43
2005 $4.17

Earnings Per Share – ModernGraham

2015 (estimate) $6.94
2014 $6.04
2013 $5.08
2012 $4.72
2011 $4.11
2010 $3.77

Dividend History

Conclusion:

Cigna Corporation qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the high PEmg and PB ratios.  The Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with the evaluation.  As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $4.11 in 2011 to an estimated $6.94 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 6.79% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Cigna Corporation (CI)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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Cigna Corporation Quarterly Valuation – April 2015 $CI

200px-Cigna_logo.svgCigna Corporation (NYSE:CI) presents an intriguing investment possibility for value investors, especially due to the strong earnings growth in recent years. Benjamin Graham, the father of value investing, taught that looking at the price cannot be the sole factor in investment decisions, as the most important aspect to consider is whether the company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to make a determination about a potential investment’s merits. Here is an updated look at how the company fares in the ModernGraham valuation model.

The model is inspired by the teachings of Benjamin Graham and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor, or the less conservative Enterprising Investor who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation in order to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company. By using theModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

CI Chart

CI data by YCharts

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Defensive Investor – Must pass all 6 of the following tests: Score = 4/6.

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – PASS
  2. Earnings Stability – Positive earnings per share for at least 10 straight years – PASS
  3. Dividend Record – Has paid a dividend for at least 10 straight years – PASS
  4. Earnings Growth – Earnings per share has increased by at least 1/3 over the last 10 years using 3-year averages at beginning and end of period – PASS
  5. Moderate PEmg (price over normalized earnings) ratio – PEmg is less than 20 – FAIL
  6. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – Must pass all 3 of the following tests or be suitable for a defensive investor: Score = 3/3.

  1. Earnings Stability – Positive earnings per share for at least 5 years – PASS
  2. Dividend Record – Currently pays a dividend – PASS
  3. Earnings Growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data

Recent Price $131.13
MG Value $160.40
MG Opinion Fairly Valued
Value Based on 3% Growth $87.51
Value Based on 0% Growth $51.30
Market Implied Growth Rate 6.61%
PEmg 21.73
PB Ratio 3.37

Balance Sheet – December 2014

Total Debt $5,005,000,000
Total Assets $55,896,000,000
Intangible Assets $5,989,000,000
Total Liabilities $45,122,000,000
Outstanding Shares 276,700,000

Earnings Per Share

2014 $7.83
2013 $5.18
2012 $5.61
2011 $4.59
2010 $4.65
2009 $4.73
2008 $1.05
2007 $3.87
2006 $3.43
2005 $4.17
2004 $3.48

Earnings Per Share – ModernGraham

2014 $6.04
2013 $5.08
2012 $4.72
2011 $4.11
2010 $3.77
2009 $3.37

Dividend History

CI Dividend Chart

CI Dividend data by YCharts

Conclusion:

Cigna Corporation passes all of the initial requirements of the Enterprising Investor, but not the Defensive Investor. The more conservative of the two investor types is concerned by the high PEmg and PB ratios. As a result, only Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $3.77 in 2010 to $6.04 for 2014. This is a strong level of demonstrated growth, which supports the market’s implied estimate for earnings growth of 6.61% over the next 7-10 years. The ModernGraham valuation model returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating the company is fairly valued at the present time.

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Cigna Corporation Quarterly Valuation – January 2015 $CI

200px-Cigna_logo.svg

Cigna Corporation passes the initial requirements of both the Defensive Investor and the Enterprising Investor. In fact, the company receives a perfect score for both investor types, a rare accomplishment which indicates the company is in a very strong financial position. As a result, value investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $3.77 in 2010 to $5.86 for 2014. This is a very strong level of demonstrated growth which is well above the market’s implied estimate for earnings growth of only 5.08% over the next 7-10 years. In fact, the historical growth is around 11% per year, so the market is expecting a very significant drop in earnings growth. The ModernGraham valuation model reduces the historical growth to a more conservative figure, assuming that some slowdown will occur, and therefore returns an estimate of intrinsic value falling above the current price, indicating the company is undervalued at the present time.

Be sure to check out previous ModernGraham valuations of Cigna Corporation (CI) for greater perspective!

Read the full valuation on Seeking Alpha!

CI Chart

CI data by YCharts

Disclaimer:  The author did not hold a position in Cigna Corporation (CI) at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Cigna Corporation Quarterly Stock Valuation – October 2014 $CI

200px-Cigna_logo.svgIn the wake of the great financial crisis it can sometimes be difficult for Intelligent Investors to find a solid financial company in which to invest, because they require specific achievements over the historical period.  Many investors may simply decide to throw out the worst years with the rationale that they are outliers that shouldn’t be considered when evaluating the company’s prospects, but doing so would involve speculation.  We don’t know whether the financial crisis will happen again, but we do know that if it does, we can expect to see similar results as we did before.  By continuing to require the same standards for the historical period, Intelligent Investors are able to whittle down banks to only those with the best financial position, and then they are able to determine an intrinsic value to get a sense of whether the company is a good investment.  In addition, a company must have strong financial statements to prove that it is stable enough for Intelligent Investors.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Cigna Corporation (CI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cigna Corporation, together with its subsidiaries, is a global health services company. The Company’s subsidiaries are providers of medical, dental, disability, life and accident insurance and related products and services. It also offers Medicare and Medicaid products and health, life and accident insurance coverage’s primarily to individuals in the United States and selected international markets. The Company operates through five business segments, and the three segments which are most significant to its operations are Global Health Care, Global Supplemental Benefits, and Group Disability and Life. The other two segments are Run-off Reinsurance and Other Operations, including corporate-owned life insurance. For United States based customers, the Company operates 18 service centers that together processed approximately 160 million medical claims during the year ended December 31, 2013.
CI Chart

CI data by YCharts

Defensive Investor – must pass all 6 of the following tests: Score = 6/6

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  3. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  4. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  5. Moderate PEmg ratio – PEmg is less than 20 – PASS
  6. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass all 3 of the following tests or be suitable for a defensive investor: Score = 3/3

  1. Earnings Stability – positive earnings per share for at least 5 years – PASS
  2. Dividend Record – currently pays a dividend – PASS
  3. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $87.71
MG Value $148.89
MG Opinion Undervalued
Value Based on 3% Growth $86.41
Value Based on 0% Growth $50.65
Market Implied Growth Rate 3.11%
PEmg 14.72
PB Ratio 2.12

Balance Sheet – 6/30/2014

Total Debt $5,022,000,000
Total Assets $55,929,000,000
Intangible Assets $8,525,000,000
Total Liabilities $44,992,000,000
Outstanding Shares 264,600,000

Earnings Per Share

2014 (estimate) $7.40
2013 $5.18
2012 $5.70
2011 $4.84
2010 $4.89
2009 $4.73
2008 $1.04
2007 $3.88
2006 $3.44
2005 $3.28
2004 $3.81

Earnings Per Share – ModernGraham 

2014 (estimate) $5.96
2013 $5.18
2012 $4.87
2011 $4.26
2010 $3.85
2009 $3.31

Dividend History

CI Dividend Chart

CI Dividend data by YCharts

Conclusion:

Cigna Corporation is suitable for either the Defensive Investor or the Enterprising Investor.  The company passes all of the requirements of both investor types, a strong indicator of its financial stability.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears undervalued after growing its EPSmg (normalized earnings) from $3.85 in 2010 to an estimated $5.96 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 3.11% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the market price.

Be sure to check out previous ModernGraham valuations of Cigna Corporation (CI) for better perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Cigna Corporation (CI)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Cigna Corporation (CI) or in any of the other companies listed in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from the Wikipedia; this article is not affiliated with the company in any manner.

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