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Is Cigna (CI) Stock Undervalued Right Now?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Cigna (CI) is a stock many investors are watching right now. CI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

We also note that CI holds a PEG ratio of 0.77. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CI's industry has an average PEG of 0.94 right now. Over the last 12 months, CI's PEG has been as high as 1.16 and as low as 0.69, with a median of 0.82.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CI has a P/S ratio of 0.57. This compares to its industry's average P/S of 1.03.

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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