CIGNA (CI) and Molina Healthcare (MOH) Critical Review

CIGNA (NYSE: CI) and Molina Healthcare (NYSE:MOH) are both mid-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, profitability and risk.

Volatility & Risk

CIGNA has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500. Comparatively, Molina Healthcare has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500.

Dividends

CIGNA pays an annual dividend of $0.04 per share and has a dividend yield of 0.0%. Molina Healthcare does not pay a dividend. CIGNA pays out 0.4% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares CIGNA and Molina Healthcare’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CIGNA $39.67 billion 1.37 $1.87 billion $9.13 24.11
Molina Healthcare $17.71 billion 0.30 $52.00 million ($6.07) -15.13

CIGNA has higher revenue and earnings than Molina Healthcare. Molina Healthcare is trading at a lower price-to-earnings ratio than CIGNA, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations and price targets for CIGNA and Molina Healthcare, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CIGNA 0 3 12 0 2.80
Molina Healthcare 3 8 4 0 2.07

CIGNA presently has a consensus price target of $204.27, indicating a potential downside of 7.21%. Molina Healthcare has a consensus price target of $69.54, indicating a potential downside of 24.27%. Given CIGNA’s stronger consensus rating and higher possible upside, analysts plainly believe CIGNA is more favorable than Molina Healthcare.

Profitability

This table compares CIGNA and Molina Healthcare’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CIGNA 5.74% 18.85% 4.37%
Molina Healthcare -1.76% 17.76% 3.40%

Institutional & Insider Ownership

87.8% of CIGNA shares are held by institutional investors. 1.3% of CIGNA shares are held by company insiders. Comparatively, 6.2% of Molina Healthcare shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

CIGNA beats Molina Healthcare on 13 of the 16 factors compared between the two stocks.

About CIGNA

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, and Other Operations and Corporate. Its Global Health Care segment aggregates the commercial and Government operating segments. Its commercial operating segment encompasses the United States commercial and certain international healthcare businesses serving employers and their employees, other groups, and individuals. Its Global Supplemental Benefits segment offers supplemental health, life and accident insurance products in selected international markets and in the United States. Its Group Disability and Life segment provides group long-term and short-term disability insurance, group life insurance, accident and specialty insurance and related services.

About Molina Healthcare

Molina Healthcare, Inc. offers Medicaid-related solutions for low-income families and individuals, and assists government agencies in their administration of the Medicaid program. The Company operates through three segments: Health Plans, Molina Medicaid Solutions and Other, which includes its Pathways Health and Community Support LLC (Pathways) business. It arranges healthcare services for persons served by Medicaid, Medicare, the Children’s Health Insurance Program (CHIP) and the Marketplace, and products to assist government agencies in their administration of the Medicaid program. As of December 31, 2016, the Company’s Health Plans segment consisted of health plans in 12 states and the Commonwealth of Puerto Rico, and its direct delivery business. The Molina Medicaid Solutions segment provides support to state government agencies in the administration of their Medicaid programs, including business processing, information technology development, and administrative services.

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