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Should Value Investors Buy Cigna (CI) Stock?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Cigna (CI). CI is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Investors will also notice that CI has a PEG ratio of 0.81. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CI's PEG compares to its industry's average PEG of 0.98. Within the past year, CI's PEG has been as high as 1.16 and as low as 0.69, with a median of 0.83.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CI has a P/S ratio of 0.61. This compares to its industry's average P/S of 1.07.

Value investors will likely look at more than just these metrics, but the above data helps show that Cigna is likely undervalued currently. And when considering the strength of its earnings outlook, CI sticks out at as one of the market's strongest value stocks.


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