Aetna: Quadrix Sees Healthy Gains

07/16/2014 7:00 am EST


Charles Carlson

Editor, DRIP Investor

My Quadrix stock-rating system ranks some 4,900 companies based on more than 90 different fundamental and technical variables, explains Chuck Carlson, editor of DRIP Investor.

Quadrix scores both fundamental as well as technical indicators when assigning a ranking, which is 0 to 100, with 100 being the highest score. A high rating typically signals companies with the ability to outperform.

We also use Quadrix scores to create sector-specific scores, which allow us to compare stocks within the same peer group.

One of my favorite stocks is Aetna (AET), which has strong category scores, with Value, Operating Momentum, Quality, and Performance scores and also ranks well relative to its sector peers.

The company is comprised of healthcare-related insurance programs and services, including medical, pharmacy benefit management, dental, behavioral health, and vision plans.

The firm also provides Medicare and Medicaid products and services. Its group insurance segment provides life, disability, and long-term care insurance products.

The stock is trading around its 52-week high, fueled by March quarter per-share earnings that beat the consensus analysts’ estimate by a whopping 27%. Wall Street continues to evaluate medical-insurance providers and how they will perform under the Affordable Care Act (ACA). 

Aetna recently stated that it will look for a raise in premiums of less than 20% in 2015 for its plans under the ACA. The firm lost money this year with ACA plans, but ACA exchanges represent roughly 3% of Aetna’s medical membership. Per-share profits should grow in the 10% range over the next two years.

With a Quadrix Value score of 85, there appears to be plenty still left in the tank for these shares. The dividend was boosted more than 12% earlier this year. The stock currently yields 1.1%.

Aetna’s direct-purchase plan allows anyone to buy the first share and every share directly from the company.

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