AET Investment Analysis Report & Stock Research, Aetna, Inc.

Aetna, Incorporated (AET)

AET Stock Report

2-Year Price History

View Larger AET Chart
NYSE:AET
$34.04
(12/21 6:40PM)
+4.7%
Open$32.64 Mkt Cap$14.1 Billion
High$34.91 52Wk High$34.87
Low$32.51 52Wk Low$18.66
Volume11.1 Million Avg Vol 10D7.1 Million

Ockham's Rating/Recommendation Summary

Rating specific information requires Premium Access.
Buy Now or Learn More about Ockham's Features and Services.

AET Revenue

As a value investing shop, we are interested in seeing how AET's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 1.07x and the low end of the range at 0.56x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for AET of 0.42x is well below its normal historic Price to Sales levels. At a price of $32.51, AET is 49% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.

AET Cash Earnings

Cash Earnings is always one of the most important factors to review for a company and, more importantly, an investment in a stock. AET is significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for AET, the current level of Cash Earnings compared to its historical levels helps identify where AET is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 18.34 and a historical low Cash Earnings per share ratio of 9.08, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for AET? From the Ockham perspective, we are looking specifically at AET to see if the market is recognizing the huge disparity between AET's past stock price to Cash Earnings ratio to today's levels. At a difference of 22% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at AET. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

AET Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure of a company's inherent expectations.

Comparable to our analysis of Sales and Cash Earnings per share, we examine dividend yields from AET against the historic high and low levels over an available data range. Because AET has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In AET’s case, the estimated annual dividend is $0.04 producing a current dividend yield of 0.12%. The highest dividend yield from AET in recent history was 0.28% while the lowest dividend yield was 0.03%. It is never a good sign for a company to pay significantly lower dividends, in this case 22.58% below the median yield. Although, dividends are a relatively small portion of our analysis framework, we still see this as a negative factor.

Peer Comparison

:

Aetna, Inc. Industry Grouping

(12/18/2009)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding AET) 20.59 8.91 » 149.27 4.05 1.37 » 8.59 22.85% 15.10%
*10 year range does not include current year values
Fresenius Medical Care AG & CO KGAA FMS $15.8 Billion $53.79 12.17 2.67 » 16.71 1.45 0.27 » 1.74 13.93% 12.12%
Aetna, Inc. AET $14.1 Billion $32.51 10.80 1.34 » 19.71 0.42 0.13 » 1.25 11.48% 18.92%
Zimmer Holdings, Inc. ZMH $12.5 Billion $58.47 11.76 6.17 » 51.26 3.10 1.53 » 9.17 16.74% 15.10%
St. Jude Medical, Inc. STJ $12.3 Billion $36.80 20.56 14.69 » 37.21 2.67 1.98 » 6.71 17.69% 16.14%
Quest Diagnostics, Inc. DGX $11.3 Billion $60.93 12.28 8.25 » 20.83 1.52 0.97 » 2.29 8.88% 17.46%
Intuitive Surgical, Inc. ISRG $11.0 Billion $289.17 46.19 12.77 » 620.33 11.49 2.11 » 23.02 57.02% 14.68%

Sharpen Your Investing

  • Access to over 5,000 stock reports
  • Portfolio Analytics and Tracking
  • Business Television Tracking
  • CNBC and Fox Business Show Recaps
The Latest Financial News
The most recent Stocks on Financial TV & Blogs from impactful financial news sources

Dividends and Aetna, Incorporated Among the Topics Covered on Power Lunch

For income investors, dividend news is obviously important. AET's dividends were discussed recently on Power Lunch.

Premium Content - please sign up for Ockham PREMIUM to gain full access and to see what Power Lunch said about AETNA, INC.

Learn About RazorWire?

News Breaking on Aetna, Incorporated on Power Lunch

As always, the latest news on AET is available to Ockham clients through RazorWire, and it was mentioned recently on Power Lunch.

Premium Content - please sign up for Ockham PREMIUM to gain full access and to see what Power Lunch said about AETNA, INC.

Learn About RazorWire?

Discussion Turns to AET and Merger Talk on The Call

News broke today regarding mergers and acquisitions and Aetna, Incorporated was discussed as well on The Call. Other sources will be required to know exactly what the context was in the discussion.

Premium Content - please sign up for Ockham PREMIUM to gain full access and to see what The Call said about AETNA, INC.

Learn About RazorWire?

Fox Business Discusses Higher Prices and Aetna, Incorporated

An abnormally high price is obviously a joyous occasion for investors in that stock. See what Fox Business was talking about for AET below.

Premium Content - please sign up for Ockham PREMIUM to gain full access and to see what Fox Business said about AETNA, INC.

Learn About RazorWire?

The Call: What is Happening with Aetna, Incorporated Now?

Staying informed on the news is invaluable for investors, and RazorWire has captured a recently discussion on AET from The Call.

Premium Content - please sign up for Ockham PREMIUM to gain full access and to see what The Call said about AETNA, INC.

Learn About RazorWire?

A Discussion of AET's CEO Occurred on Fox Business

CEO's are the strategic leaders of their companies, so any mention of them will garner special interest from us.

As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, AET has been less covered in the news compared to the rest of our universe of stocks. The improving valuation of Aetna, Incorporated has prompted us to upgrade this stock as of Saturday, December 05, 2009. Crowd sentiment is neutral from the millions of opinions submitted through Motley Fool CAPS, which suggests most investors on their platform believe Aetna, Incorporated will perform just about the same as the index. Check the news on this stock because there is a catalyst that has allowed this stock to advance 9.07% today. We considered AET as Undervalued as of our latest report at $28.98. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise. That being said, the recent price appriciation does make it slightly less attractive to value investors as they may have missed the boat.

“… Coming up, jack rowe, former chairman and ceo of AETNA, is also a medical doctor, joining us with the results of a new staed. …”

Holding AET Stock? See What Is Being Discussed on Squawk On The Street

The latest news from business television and influential blogs is always available through Ockham's RazorWire, and this news is in relation to Aetna, Incorporated.

It is also notable that we have recently upgraded this stock on Saturday, December 05, 2009 because AET is more attractive in many of the valuation metrics we evaluate. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Aetna, Incorporated has actually sunk a bit in comparison to the others. Our sentiment indicator, provided through the Motley Fool CAPS survey, suggests that investors are neutral overall towards AET and think that it will generally perform in-line with the S&P 500. At present, Ockham has a valuation stance of Undervalued on AET, as we could see significant price appreciation based on current fundamentals like cash earnings and revenue.

“… The whole basket of stocks including AETNA, united health and wellcare is trading higher leerg swan which specializes in health care sector coverage declares in a research note ... …”

Heard on Squawk Box: CEO of AET Discussed

CEO's are the strategic leaders of their companies, so any mention of them will garner special interest from us.

As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, AET has been less covered in the news compared to the rest of our universe of stocks. Crowd sentiment is neutral from the millions of opinions submitted through Motley Fool CAPS, which suggests most investors on their platform believe Aetna, Incorporated will perform just about the same as the index. We consider AET as Undervalued at the current price of $30.47. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise. The improving valuation of Aetna, Incorporated has prompted us to upgrade this stock as of Saturday, December 05, 2009.

“… well, let's just say we have a rule at AETNA which is called positive intent. So we always assume positive intent. > > american petroleum institute, all right. …”

Check Out Squawk Box and News on AET

News has broken via the television and viral blogs regarding AET, so investors should take an interest in learning what was said.

As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, AET has been less covered in the news compared to the rest of our universe of stocks. Crowd sentiment is neutral from the millions of opinions submitted through Motley Fool CAPS, which suggests most investors on their platform believe Aetna, Incorporated will perform just about the same as the index. The improving valuation of Aetna, Incorporated has prompted us to upgrade this stock as of Saturday, December 05, 2009. We consider AET as Undervalued at the current price of $30.47. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise.

“… well, I wouldn't say anyone gets overcharged, but those who are, you know, really paying their fair shares are companies like AETNA and the employers who buy their health ... …”

Fox Business Has News on AET

News has broken via the television and viral blogs regarding AET, so investors should take an interest in learning what was said.

Ranking all stocks in terms of news coverage offers some interesting data. In the case of AET, it is getting significantly more attention in recent news coverage than we are used to seeing. The Motley Fool CAPS crowd believes this stock will perform generally in line with the benchmark, or in other words the crowd is neutral. Please have a look at our report for our reasons to upgrade the stock to Undervalued on our report dated Saturday, December 05, 2009. Based on our methodology, Aetna, Incorporated should hold some appeal to value investors as we view it as Undervalued.

“… We're talking the s&p; 500 stocks and also the 500 stocks, the best performers are nvidia, advanced micro and also metropcs and sprint, AETNA, cigna, the names that are leading the ... …”

View All Aetna, Inc. Stock News

Key Fundamentals

AET - Aetna, Incorporated Fundamentals
Price (12/21 6:40PM) $34.04
Volume (12/21 6:40PM) 11.1 Million
Last Close Price $32.51
10 Day Average Volume 7.1 Million
13 Week Price Range $24.94 - $34.19
52 Week Price Range $18.66 - $34.87
LTM Revenue $33.7 Billion
 
Shares Outstanding (12/2008) 433.5 Million
Market Capitalization $14.1 Billion
Shares Held By Institutions 398.3 Million
Institutional Holders 702
% Shares Held By Institutions 91.30%
Earnings Per Share (EPS) $2.83
P/E Ratio 11.30
Book Value Per Share $22.01
 
Gross Margin n/a%
Annual Dividend 0.04
Dividend Yield 0.10%
Beta 1.25
Fiscal Year Ends December

About Aetna, Inc.

Aetna, Incorporated is considered to operate in the Healthcare sector. They specifically operate in the Health Care Plans business segment contained within the Health Services industry.

The Company offers a range of traditional and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life and disability plans and medical management capabilities.