Cigna vs Humana Which Outperforms?

Cigna Corporation and Humana Inc. are two prominent health insurance companies in the United States. Both companies offer a range of healthcare products and services, including insurance plans for individuals, employers, and government programs. Investors interested in the healthcare sector often compare Cigna and Humana stocks as potential investment opportunities. While both companies have demonstrated stability and growth in their respective markets, there are differences in their financial performance, strategies, and outlook that investors carefully consider before making investment decisions.

Cigna or Humana?

When comparing Cigna and Humana, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Cigna and Humana.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Cigna has a dividend yield of 1.99%, while Humana has a dividend yield of 1.25%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Cigna reports a 5-year dividend growth of 161.81% year and a payout ratio of 64.59%. On the other hand, Humana reports a 5-year dividend growth of 12.10% year and a payout ratio of 31.94%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Cigna P/E ratio at 40.42 and Humana's P/E ratio at 25.02. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Cigna P/B ratio is 2.29 while Humana's P/B ratio is 1.94.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Cigna has seen a 5-year revenue growth of 2.37%, while Humana's is 1.07%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Cigna's ROE at 5.59% and Humana's ROE at 8.16%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $339.81 for Cigna and $270.72 for Humana. Over the past year, Cigna's prices ranged from $253.95 to $370.83, with a yearly change of 46.02%. Humana's prices fluctuated between $213.31 and $527.18, with a yearly change of 147.14%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.