Humana (NYSE: HUM) and Aetna (NYSE:AET) are both large-cap medical companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, valuation, institutional ownership, analyst recommendations, earnings, risk and profitability.
Dividends
Humana pays an annual dividend of $1.60 per share and has a dividend yield of 0.6%. Aetna pays an annual dividend of $2.00 per share and has a dividend yield of 1.3%. Humana pays out 13.1% of its earnings in the form of a dividend. Aetna pays out 43.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Humana has raised its dividend for 6 consecutive years.
Insider and Institutional Ownership
99.1% of Humana shares are held by institutional investors. Comparatively, 91.7% of Aetna shares are held by institutional investors. 0.8% of Humana shares are held by insiders. Comparatively, 0.9% of Aetna shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Valuation and Earnings
This table compares Humana and Aetna’s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Humana | $53.87 billion | 0.68 | $2.66 billion | $12.25 | 20.65 |
| Aetna | $62.20 billion | 0.83 | $6.06 billion | $4.58 | 34.08 |
Aetna has higher revenue and earnings than Humana. Humana is trading at a lower price-to-earnings ratio than Aetna, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Humana has a beta of 0.91, suggesting that its stock price is 9% less volatile than the S&P 500. Comparatively, Aetna has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500.
Profitability
This table compares Humana and Aetna’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Humana | 3.37% | 15.85% | 5.76% |
| Aetna | 2.52% | 20.52% | 5.35% |
Analyst Recommendations
This is a breakdown of current ratings and recommmendations for Humana and Aetna, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Humana | 0 | 7 | 12 | 0 | 2.63 |
| Aetna | 0 | 5 | 14 | 0 | 2.74 |
Humana presently has a consensus price target of $243.44, suggesting a potential downside of 3.78%. Aetna has a consensus price target of $159.38, suggesting a potential upside of 2.10%. Given Aetna’s stronger consensus rating and higher possible upside, analysts clearly believe Aetna is more favorable than Humana.
Summary
Aetna beats Humana on 9 of the 17 factors compared between the two stocks.
Humana Company Profile
Humana Inc. is a health and well-being company. The Company’s segments include Retail, Group and Specialty, Healthcare Services and Individual Commercial. The Retail segment consists of Medicare benefits, as well as individual commercial fully insured medical and specialty health insurance benefits, including dental, vision, and other supplemental health and financial protection products. The Group and Specialty segment consists of employer group commercial fully insured medical and specialty health insurance benefits, including dental, vision, and other supplemental health. The Healthcare Services segment includes services offered to its health plan members, as well as to third parties, including pharmacy solutions, provider services, home-based services and clinical programs, as well as services and capabilities to manage population health. The Individual Commercial segment includes Individual Commercial products marketed under the HumanaOne brand.
Aetna Company Profile
Aetna Inc. is a diversified healthcare benefits company. The Company operates through three segments: Health Care, Group Insurance and Large Case Pensions. It offers a range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life and disability plans, medical management capabilities, Medicaid healthcare management services, Medicare Advantage and Medicare Supplement plans, workers’ compensation administrative services and health information technology (HIT) products and services. The Health Care segment consists of medical, pharmacy benefit management services, dental, behavioral health and vision plans offered on both an Insured basis and an employer-funded basis, and emerging businesses products and services. The Group Insurance segment includes group life insurance and group disability products. Its products are offered on an Insured basis.
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