Please ensure Javascript is enabled for purposes of website accessibility

Why Cigna Corporation Shares Crashed

By Alex Planes – Feb 11, 2014 at 1:27PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is this meaningful or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Cigna Corporation (CI) have lost 10% of their value today after the health insurer disappointed Wall Street with its fourth-quarter earnings report.

So what: Cigna's fourth-quarter revenue came in at $8.15 billion, a 7% year-over-year improvement and better than the $8.05 billion Wall Street consensus. However, Cigna's adjusted earnings of $1.39 per share were worse than the $1.49 in EPS analysts had expected (GAAP EPS was $1.29), and the company's guidance for 2014 now looks worse: While analysts had modeled Cigna's full-year EPS at $7.32, the company offered a range of $6.80 to $7.20 per share.

Now what: Obamacare's impact has yet to be fully felt on the health insurance industry's bottom line, but if this report is any indication, that impact won't be a good one. Shares of other insurers are also feeling the pain today as investors come to grips with the likelihood of higher medical costs -- Cigna highlighted higher-than-expected costs in its private Medicare business as a reason for the profit drag.

Today's drop shouldn't scare long-term investors away, but there might be better insurers out there for your investment dollars. Don't jump in before you assess Cigna's value relative to its peers.

Want more news and updates? Add Cigna to your Watchlist now.

Alex Planes has no position in any stocks mentioned, and neither does The Motley Fool. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cigna Corp. Stock Quote
Cigna Corp.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.