Selecting great companies operating in large and growing industries is as close as possible to a surefire way to build tremendous wealth.

Due to increasing health insurance adoption rates, the health insurance industry should continue to do well moving forward. In fact, market research firm Global Market Insights expects the global health insurance market to compound at a 4.6% annual rate from $2.8 trillion in 2020 to $3.9 trillion by 2027.

As the fourth-largest health insurer in the world with an $84 billion market capitalization, Cigna (CI 0.09%) will be a major beneficiary of growing demand for health insurance. But does that make the stock a buy at this time? Let's dig into Cigna's fundamentals and valuation to find out. 

Perpetually outperforming Wall Street consensus

In early May, Cigna reported its first-quarter results for the period ended March 31. The company managed to top both analysts' net revenue and non-GAAP (adjusted) diluted earnings per share (EPS) estimates for the quarter. 

Cigna recorded $44 billion in net revenue in the first quarter, up 7.4% over the year-ago period. This exceeded the analyst consensus of $43.5 billion in net revenue for the quarter. How did the health insurer trounce the analyst net revenue prediction for the 10th quarter out of the last 10 quarters? 

Cigna's rise in net revenue during the quarter was the result of 7.2% year-over-year growth in its total customer relationships to 190.4 million. With the exception of the company's U.S. Government customer base and Medicare Part D customer base, all other areas of the business added customers, including pharmacy, medical, behavioral care, and dental.

Cigna posted $6.01 in adjusted diluted EPS in the first quarter, a gain of 27.1% over the year-ago period. This blew analysts' consensus forecast of $5.13 out of the water. So what led the company to surpass the analyst earnings projection for the ninth quarter out of the past 10 quarters? 

Cigna's non-GAAP net margin expanded 30 basis points year over year to 4.4% in the first quarter. The other catalyst that caused Cigna's earnings growth to come in higher than its net revenue growth was an 8.7% reduction in the company's weighted-average share count to 321.3 million for the quarter.

Analysts expect Cigna's double-digit earnings growth to continue to persist over the medium term with 11.5% annual earnings growth slated for the next five years. This will likely be driven by increased demand for the company's insurance products, and its share repurchase program.

A person speaks with their pharmacist.

Image source: Getty Images.

A market-beating dividend with growth potential

Cigna offers investors a 1.7% dividend yield, which is a touch higher than the S&P 500 index's 1.6% yield. But what really makes the company's dividend attractive is its future growth potential.

That's because Cigna's dividend payout ratio is expected to be just under 20% in 2022. This gives the company plenty of flexibility to grow its dividend moderately ahead of earnings in the years ahead. Paired with its 11.5% annual earnings growth potential, it wouldn't be unreasonable for the company to deliver low-teens annual dividend growth for the foreseeable future. 

The stock is priced at a dirt cheap valuation

Cigna is a fundamentally healthy business. And the stock's valuation doesn't seem to fully reflect this reality.

This is evidenced by Cigna's forward price-to-earnings (P/E) ratio of 10.9, which is significantly lower than the healthcare plan industry average forward P/E ratio of 16. That's why Cigna appears to be an excellent growth stock for investors to consider buying.