Contrasting UnitedHealth Group (UNH) and Cigna Corporation (CI)

UnitedHealth Group (NYSE: UNH) and Cigna Corporation (NYSE:CI) are both large-cap medical companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, risk, dividends, profitability, valuation, earnings and institutional ownership.

Profitability

This table compares UnitedHealth Group and Cigna Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
UnitedHealth Group 4.32% 21.52% 6.81%
Cigna Corporation 5.55% 17.40% 4.04%

Analyst Ratings

This is a breakdown of current recommendations for UnitedHealth Group and Cigna Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
UnitedHealth Group 0 0 21 0 3.00
Cigna Corporation 0 1 13 0 2.93

UnitedHealth Group currently has a consensus target price of $203.20, indicating a potential upside of 5.27%. Cigna Corporation has a consensus target price of $185.86, indicating a potential upside of 1.71%. Given UnitedHealth Group’s stronger consensus rating and higher probable upside, analysts clearly believe UnitedHealth Group is more favorable than Cigna Corporation.

Risk and Volatility

UnitedHealth Group has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500. Comparatively, Cigna Corporation has a beta of 0.43, meaning that its stock price is 57% less volatile than the S&P 500.

Insider and Institutional Ownership

86.2% of UnitedHealth Group shares are held by institutional investors. Comparatively, 87.9% of Cigna Corporation shares are held by institutional investors. 0.9% of UnitedHealth Group shares are held by company insiders. Comparatively, 1.3% of Cigna Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares UnitedHealth Group and Cigna Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
UnitedHealth Group $192.60 billion 0.97 $15.57 billion $8.54 22.60
Cigna Corporation $40.53 billion 1.14 $4.21 billion $8.68 21.05

UnitedHealth Group has higher revenue and earnings than Cigna Corporation. Cigna Corporation is trading at a lower price-to-earnings ratio than UnitedHealth Group, indicating that it is currently the more affordable of the two stocks.

Dividends

UnitedHealth Group pays an annual dividend of $3.00 per share and has a dividend yield of 1.6%. Cigna Corporation pays an annual dividend of $0.04 per share and has a dividend yield of 0.0%. UnitedHealth Group pays out 35.1% of its earnings in the form of a dividend. Cigna Corporation pays out 0.5% 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. Cigna Corporation has increased its dividend for 7 consecutive years.

Summary

UnitedHealth Group beats Cigna Corporation on 10 of the 17 factors compared between the two stocks.

About UnitedHealth Group

UnitedHealth Group Incorporated is a health and well-being company. The Company operates through four segments: UnitedHealthcare, OptumHealth, OptumInsight and OptumRx. It conducts its operations through two business platforms: health benefits operating under UnitedHealthcare and health services operating under Optum. UnitedHealthcare provides healthcare benefits to an array of customers and markets, and includes UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare & Retirement, UnitedHealthcare Community & State, and UnitedHealthcare Global businesses. Optum is a health services business serving the healthcare marketplace, including payers, care providers, employers, governments, life sciences companies and consumers, through its OptumHealth, OptumInsight and OptumRx businesses. OptumInsight provides services, technology and healthcare solutions to participants in the healthcare industry. OptumRx provides retail network contracting, purchasing and clinical solutions.

About Cigna Corporation

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.

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