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For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you'd invested in Cigna (CI) ten years ago? It may not have been easy to hold on to CI for all that time, but if you did, how much would your investment be worth today?
Cigna's Business In-Depth
With that in mind, let's take a look at Cigna's main business drivers.
Headquartered in Bloomfield, CT and formed in 1982, Cigna Corp. is the result of a merger between Connecticut General Life Insurance Company (CG) and Insurance Company of North America (INA).
On Dec 20, 2018, Cigna completed its combination with Express Scripts Holding Company. Shares of the new combined Cigna (“New Cigna”) have started trading on the NYSE under the stock ticker symbol “CI.”
With its reporting for third quarter 2020, the company updated its segment names to align with the launch of Evernorth and to better reflect a suite of services offered across its portfolio.
The segment previously reported as Health Services is now reported as Evernorth and the segment previously reported as Integrated Medical is now reported as U.S Medical. There are no changes to the underlying businesses reported in either segment.
Evernorth (constitues 72% of total revenues in 2020) includes a broad range of coordinated and point solution health services, including pharmacy services, benefits management, care solutions and data and analytics, which are provided to health plans, employers, government organizations, and health care providers.
U.S. Medical (24%) offers a variety of health care solutions to employers and individuals. Its sub-segment, the U.S. Commercial operating segment serves employers and their employees and other groups. This segment's products and services include medical, pharmacy, dental, behavioral health, vision, health advocacy programs and other products and services. Another sub-segment, the U.S. Government operating segment offers Medicare Advantage, Medicare Supplement and Medicare Part D plans for seniors (including the acquired Express Scripts' Medicare Part D business), Medicaid plans, and individual health insurance plans both on and off the public exchanges.
International Markets (4%) includes supplemental health, life and accident insurance products and health care coverage in the company’s international markets, as well as health care benefits to globally mobile employees of multinational organization
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in Cigna a decade ago, you're probably feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in May 2011 would be worth $5,651.13, or a 465.11% gain, as of May 5, 2021. Investors should keep in mind that this return excludes dividends but includes price appreciation.
In comparison, the S&P 500 gained 209.11% and the price of gold went up 16.11% over the same time frame.
Looking ahead, analysts are expecting more upside for CI.
Cigna’s stock has outperformed its industry on a year-to-date basis. The company’s revenues have been increasing consistently since the last several years. Its acquisition of Express Scripts bodes well for the long haul. It divested its Group Life and Disability insurance business, which will reduce its debt level and streamline operations. Its expanding international business provides diversification. Operating profitability achieved by controlled medical care cost along with other operating costs is aiding the company’s bottom line. Higher membership is another boon. A strong capital position coupled with coupled with solid cash generation abilities leads to investment in business. However, higher leverage is a concern for the company. Rising operating expenses might dent the company’s margins too.
The stock is up 8.52% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 2 higher, for fiscal 2021. The consensus estimate has moved up as well.
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