Reviewing Aetna (AET) & Anthem (ANTM)
Aetna (NYSE: AET) and Anthem (NYSE:ANTM) are both large-cap medical companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, risk, dividends, valuation and analyst recommendations.
Aetna pays an annual dividend of $2.00 per share and has a dividend yield of 1.3%. Anthem pays an annual dividend of $2.60 per share and has a dividend yield of 1.4%. Aetna pays out 43.7% of its earnings in the form of a dividend. Anthem pays out 24.6% 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. Aetna has increased its dividend for 2 consecutive years. Anthem is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation & Earnings
This table compares Aetna and Anthem’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Aetna||$62.20 billion||0.82||$6.06 billion||$4.58||33.72|
|Anthem||$88.03 billion||0.57||$5.75 billion||$10.56||18.09|
Aetna has higher revenue, but lower earnings than Anthem. Anthem is trading at a lower price-to-earnings ratio than Aetna, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent recommendations for Aetna and Anthem, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Aetna currently has a consensus price target of $159.38, indicating a potential upside of 3.19%. Anthem has a consensus price target of $181.31, indicating a potential downside of 5.08%. Given Aetna’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Aetna is more favorable than Anthem.
Insider and Institutional Ownership
91.7% of Aetna shares are owned by institutional investors. Comparatively, 89.5% of Anthem shares are owned by institutional investors. 0.9% of Aetna shares are owned by company insiders. Comparatively, 0.4% of Anthem shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Volatility and Risk
Aetna has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500. Comparatively, Anthem has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500.
This table compares Aetna and Anthem’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Aetna beats Anthem on 11 of the 17 factors compared between the two stocks.
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.
Anthem Company Profile
Anthem, Inc. is a health benefits company. The Company operates through three segments: Commercial and Specialty Business, Government Business and Other. It offers a spectrum of network-based managed care plans to large and small employer, individual, Medicaid and Medicare markets. Its managed care plans include preferred provider organizations; health maintenance organizations; point-of-service plans; indemnity plans and other hybrid plans, including consumer-driven health plans; and hospital only and limited benefit products. It also provides an array of managed care services to self-funded customers, including claims processing, underwriting, stop loss insurance, actuarial services, provider network access, medical cost management, disease management, wellness programs and other administrative services. It provides an array of specialty and other insurance products and services, such as dental, vision, life and disability insurance benefits and radiology benefit management.
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