Intrinsic value of Cigna - CI

Previous Close

$179.86

  Intrinsic Value

$235.86

stock screener

  Rating & Target

buy

+31%

  Value-price divergence*

-83%

Previous close

$179.86

 
Intrinsic value

$235.86

 
Up/down potential

+31%

 
Rating

buy

 
Value-price divergence*

-83%

Our model is not good at valuating stocks of financial companies, such as CI.

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 46.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.51
  4.90
  4.91
  4.92
  4.93
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.97
  4.97
  4.97
  4.97
  4.98
  4.98
  4.98
  4.98
  4.98
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  4.99
  5.00
Revenue, $m
  0
  41,648
  43,693
  45,843
  48,101
  50,475
  52,969
  55,589
  58,342
  61,234
  64,272
  67,463
  70,815
  74,336
  78,034
  81,918
  85,997
  90,281
  94,779
  99,504
  104,466
  109,677
  115,148
  120,895
  126,929
  133,265
  139,919
  146,905
  154,242
  161,946
  170,036
Variable operating expenses, $m
 
  37,954
  39,788
  41,716
  43,742
  45,871
  48,108
  50,458
  52,927
  55,521
  58,246
  60,510
  63,517
  66,675
  69,991
  73,475
  77,134
  80,976
  85,011
  89,249
  93,700
  98,373
  103,281
  108,435
  113,847
  119,530
  125,498
  131,765
  138,346
  145,256
  152,512
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  36,724
  37,954
  39,788
  41,716
  43,742
  45,871
  48,108
  50,458
  52,927
  55,521
  58,246
  60,510
  63,517
  66,675
  69,991
  73,475
  77,134
  80,976
  85,011
  89,249
  93,700
  98,373
  103,281
  108,435
  113,847
  119,530
  125,498
  131,765
  138,346
  145,256
  152,512
Operating income, $m
  2,979
  3,694
  3,905
  4,127
  4,359
  4,604
  4,861
  5,131
  5,415
  5,713
  6,026
  6,953
  7,298
  7,661
  8,042
  8,443
  8,863
  9,304
  9,768
  10,255
  10,766
  11,303
  11,867
  12,460
  13,081
  13,735
  14,420
  15,140
  15,896
  16,690
  17,524
EBITDA, $m
  3,589
  4,453
  4,672
  4,902
  5,143
  5,397
  5,664
  5,944
  6,238
  6,547
  6,872
  7,214
  7,572
  7,948
  8,344
  8,759
  9,195
  9,653
  10,134
  10,640
  11,170
  11,727
  12,312
  12,927
  13,572
  14,249
  14,961
  15,708
  16,492
  17,316
  18,181
Interest expense (income), $m
  244
  242
  349
  462
  580
  705
  836
  974
  1,118
  1,270
  1,430
  1,597
  1,773
  1,958
  2,152
  2,356
  2,571
  2,796
  3,032
  3,280
  3,541
  3,815
  4,102
  4,404
  4,721
  5,054
  5,404
  5,771
  6,156
  6,561
  6,986
Earnings before tax, $m
  2,979
  3,453
  3,556
  3,665
  3,779
  3,899
  4,025
  4,158
  4,297
  4,443
  4,596
  5,356
  5,525
  5,703
  5,890
  6,086
  6,292
  6,509
  6,736
  6,975
  7,225
  7,489
  7,765
  8,055
  8,360
  8,680
  9,016
  9,369
  9,740
  10,129
  10,538
Tax expense, $m
  1,136
  932
  960
  990
  1,020
  1,053
  1,087
  1,123
  1,160
  1,200
  1,241
  1,446
  1,492
  1,540
  1,590
  1,643
  1,699
  1,757
  1,819
  1,883
  1,951
  2,022
  2,097
  2,175
  2,257
  2,344
  2,434
  2,530
  2,630
  2,735
  2,845
Net income, $m
  1,867
  2,521
  2,596
  2,675
  2,759
  2,846
  2,938
  3,035
  3,137
  3,243
  3,355
  3,910
  4,033
  4,163
  4,300
  4,443
  4,593
  4,751
  4,917
  5,092
  5,275
  5,467
  5,668
  5,880
  6,103
  6,337
  6,582
  6,840
  7,110
  7,394
  7,693

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  59,360
  62,255
  65,311
  68,524
  71,900
  75,448
  79,176
  83,093
  87,208
  91,531
  96,072
  100,842
  105,852
  111,115
  116,642
  122,448
  128,545
  134,948
  141,673
  148,736
  156,152
  163,941
  172,120
  180,709
  189,729
  199,200
  209,146
  219,590
  230,556
  242,072
  254,164
Adjusted assets (=assets-cash), $m
  59,360
  62,255
  65,311
  68,524
  71,900
  75,448
  79,176
  83,093
  87,208
  91,531
  96,072
  100,842
  105,852
  111,115
  116,642
  122,448
  128,545
  134,948
  141,673
  148,736
  156,152
  163,941
  172,120
  180,709
  189,729
  199,200
  209,146
  219,590
  230,556
  242,072
  254,164
Revenue / Adjusted assets
  0.000
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
  0.669
Average production assets, $m
  2,031
  2,124
  2,228
  2,338
  2,453
  2,574
  2,701
  2,835
  2,975
  3,123
  3,278
  3,441
  3,612
  3,791
  3,980
  4,178
  4,386
  4,604
  4,834
  5,075
  5,328
  5,594
  5,873
  6,166
  6,473
  6,797
  7,136
  7,492
  7,866
  8,259
  8,672
Working capital, $m
  0
  292
  306
  321
  337
  353
  371
  389
  408
  429
  450
  472
  496
  520
  546
  573
  602
  632
  663
  697
  731
  768
  806
  846
  888
  933
  979
  1,028
  1,080
  1,134
  1,190
Total debt, $m
  5,032
  7,269
  9,620
  12,090
  14,686
  17,415
  20,281
  23,293
  26,458
  29,782
  33,274
  36,942
  40,795
  44,842
  49,093
  53,557
  58,246
  63,170
  68,342
  73,773
  79,476
  85,466
  91,755
  98,360
  105,296
  112,580
  120,228
  128,259
  136,693
  145,548
  154,847
Total liabilities, $m
  45,637
  47,874
  50,225
  52,695
  55,291
  58,020
  60,886
  63,898
  67,063
  70,387
  73,879
  77,547
  81,400
  85,447
  89,698
  94,162
  98,851
  103,775
  108,947
  114,378
  120,081
  126,071
  132,360
  138,965
  145,901
  153,185
  160,833
  168,864
  177,298
  186,153
  195,452
Total equity, $m
  13,723
  14,381
  15,087
  15,829
  16,609
  17,429
  18,290
  19,194
  20,145
  21,144
  22,193
  23,294
  24,452
  25,668
  26,944
  28,285
  29,694
  31,173
  32,727
  34,358
  36,071
  37,870
  39,760
  41,744
  43,827
  46,015
  48,313
  50,725
  53,258
  55,919
  58,712
Total liabilities and equity, $m
  59,360
  62,255
  65,312
  68,524
  71,900
  75,449
  79,176
  83,092
  87,208
  91,531
  96,072
  100,841
  105,852
  111,115
  116,642
  122,447
  128,545
  134,948
  141,674
  148,736
  156,152
  163,941
  172,120
  180,709
  189,728
  199,200
  209,146
  219,589
  230,556
  242,072
  254,164
Debt-to-equity ratio
  0.367
  0.510
  0.640
  0.760
  0.880
  1.000
  1.110
  1.210
  1.310
  1.410
  1.500
  1.590
  1.670
  1.750
  1.820
  1.890
  1.960
  2.030
  2.090
  2.150
  2.200
  2.260
  2.310
  2.360
  2.400
  2.450
  2.490
  2.530
  2.570
  2.600
  2.640
Adjusted equity ratio
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231
  0.231

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,867
  2,521
  2,596
  2,675
  2,759
  2,846
  2,938
  3,035
  3,137
  3,243
  3,355
  3,910
  4,033
  4,163
  4,300
  4,443
  4,593
  4,751
  4,917
  5,092
  5,275
  5,467
  5,668
  5,880
  6,103
  6,337
  6,582
  6,840
  7,110
  7,394
  7,693
Depreciation, amort., depletion, $m
  610
  759
  767
  775
  784
  793
  803
  813
  823
  835
  846
  261
  274
  287
  301
  316
  332
  349
  366
  384
  404
  424
  445
  467
  490
  515
  541
  568
  596
  626
  657
Funds from operations, $m
  5,381
  3,279
  3,363
  3,450
  3,543
  3,639
  3,741
  3,848
  3,960
  4,078
  4,202
  4,170
  4,307
  4,450
  4,601
  4,759
  4,926
  5,100
  5,283
  5,476
  5,678
  5,890
  6,113
  6,347
  6,593
  6,851
  7,123
  7,407
  7,706
  8,020
  8,350
Change in working capital, $m
  1,355
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
  30
  31
  33
  35
  36
  38
  40
  42
  44
  47
  49
  51
  54
  57
Cash from operations, $m
  4,026
  3,266
  3,349
  3,435
  3,527
  3,623
  3,724
  3,829
  3,941
  4,058
  4,180
  4,148
  4,283
  4,426
  4,575
  4,732
  4,897
  5,070
  5,252
  5,443
  5,643
  5,854
  6,075
  6,307
  6,551
  6,807
  7,076
  7,358
  7,655
  7,966
  8,293
Maintenance CAPEX, $m
  0
  -154
  -161
  -169
  -177
  -186
  -195
  -205
  -215
  -225
  -237
  -248
  -261
  -274
  -287
  -301
  -316
  -332
  -349
  -366
  -384
  -404
  -424
  -445
  -467
  -490
  -515
  -541
  -568
  -596
  -626
New CAPEX, $m
  -461
  -93
  -104
  -110
  -115
  -121
  -127
  -134
  -140
  -147
  -155
  -163
  -171
  -180
  -189
  -198
  -208
  -218
  -229
  -241
  -253
  -266
  -279
  -293
  -308
  -323
  -339
  -356
  -374
  -393
  -413
Cash from investing activities, $m
  -2,574
  -247
  -265
  -279
  -292
  -307
  -322
  -339
  -355
  -372
  -392
  -411
  -432
  -454
  -476
  -499
  -524
  -550
  -578
  -607
  -637
  -670
  -703
  -738
  -775
  -813
  -854
  -897
  -942
  -989
  -1,039
Free cash flow, $m
  1,452
  3,019
  3,083
  3,157
  3,234
  3,316
  3,401
  3,491
  3,586
  3,685
  3,789
  3,737
  3,852
  3,973
  4,099
  4,233
  4,372
  4,519
  4,674
  4,836
  5,006
  5,185
  5,372
  5,569
  5,776
  5,994
  6,222
  6,461
  6,713
  6,977
  7,255
Issuance/(repayment) of debt, $m
  -148
  2,237
  2,351
  2,471
  2,596
  2,728
  2,867
  3,012
  3,164
  3,324
  3,492
  3,668
  3,853
  4,047
  4,251
  4,464
  4,689
  4,924
  5,171
  5,431
  5,703
  5,989
  6,290
  6,605
  6,936
  7,283
  7,648
  8,031
  8,433
  8,856
  9,299
Issuance/(repurchase) of shares, $m
  -103
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -225
  2,237
  2,351
  2,471
  2,596
  2,728
  2,867
  3,012
  3,164
  3,324
  3,492
  3,668
  3,853
  4,047
  4,251
  4,464
  4,689
  4,924
  5,171
  5,431
  5,703
  5,989
  6,290
  6,605
  6,936
  7,283
  7,648
  8,031
  8,433
  8,856
  9,299
Total cash flow (excl. dividends), $m
  1,217
  5,256
  5,434
  5,628
  5,831
  6,044
  6,268
  6,503
  6,750
  7,009
  7,281
  7,405
  7,705
  8,020
  8,350
  8,697
  9,061
  9,444
  9,845
  10,267
  10,709
  11,174
  11,662
  12,174
  12,712
  13,277
  13,870
  14,493
  15,146
  15,833
  16,554
Retained Cash Flow (-), $m
  -1,688
  -658
  -706
  -742
  -780
  -820
  -861
  -905
  -951
  -999
  -1,049
  -1,102
  -1,157
  -1,216
  -1,277
  -1,341
  -1,408
  -1,479
  -1,553
  -1,631
  -1,713
  -1,799
  -1,889
  -1,984
  -2,083
  -2,188
  -2,297
  -2,413
  -2,533
  -2,660
  -2,793
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  4,598
  4,728
  4,885
  5,051
  5,225
  5,407
  5,598
  5,799
  6,010
  6,232
  6,303
  6,547
  6,804
  7,073
  7,356
  7,653
  7,964
  8,292
  8,635
  8,996
  9,375
  9,773
  10,190
  10,629
  11,089
  11,573
  12,080
  12,613
  13,173
  13,760
Discount rate, %
 
  4.70
  4.94
  5.18
  5.44
  5.71
  6.00
  6.30
  6.61
  6.94
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.77
  11.31
  11.88
  12.47
  13.09
  13.75
  14.44
  15.16
  15.92
  16.71
  17.55
  18.42
  19.35
PV of cash for distribution, $m
 
  4,392
  4,294
  4,198
  4,086
  3,957
  3,812
  3,651
  3,474
  3,285
  3,083
  2,800
  2,589
  2,373
  2,154
  1,936
  1,722
  1,514
  1,315
  1,127
  953
  795
  652
  527
  418
  325
  249
  186
  136
  98
  68
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Cigna Corporation, a health services organization, provides insurance and related products and services in the United States and internationally. It operates through Global Health Care, Global Supplemental Benefits, Group Disability and Life, and Other Operations segments. The Global Health Care segment offers medical, dental, behavioral health, vision, and prescription drug benefit plans, as well as health advocacy programs, and other products and services to insured and self-insured customers. This segment also provides Medicare Advantage and Medicare Part D plans to seniors, and Medicaid plans. The Global Supplemental Benefits segment offers supplemental health, life, and accident insurance products. The Group Disability and Life segment provides group long-term and short-term disability, group life, accident, and specialty insurance products and related services. The Other Operations segment offers corporate-owned life insurance products that are permanent insurance contracts sold to corporations to provide life coverage; and run-off settlement annuity contracts. The company distributes its products and services through insurance brokers and insurance consultants; and directly to employers, unions and other groups, or individuals, as well as through direct response television and the Internet. Cigna Corporation was founded in 1792 and is headquartered in Bloomfield, Connecticut.

FINANCIAL RATIOS  of  Cigna (CI)

Valuation Ratios
P/E Ratio 24.7
Price to Sales 1.2
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 11.5
Price to Free Cash Flow 13
Growth Rates
Sales Growth Rate 4.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -9.6%
Cap. Spend. - 3 Yr. Gr. Rate -2.6%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 34.7%
Total Debt to Equity 36.7%
Interest Coverage 13
Management Effectiveness
Return On Assets 3.5%
Ret/ On Assets - 3 Yr. Avg. 3.9%
Return On Total Capital 10.4%
Ret/ On T. Cap. - 3 Yr. Avg. 12.1%
Return On Equity 14.5%
Return On Equity - 3 Yr. Avg. 17.5%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 9.7%
EBITDA Margin - 3 Yr. Avg. 10.8%
Operating Margin 7.5%
Oper. Margin - 3 Yr. Avg. 8.6%
Pre-Tax Margin 7.5%
Pre-Tax Margin - 3 Yr. Avg. 8.6%
Net Profit Margin 4.7%
Net Profit Margin - 3 Yr. Avg. 5.4%
Effective Tax Rate 38.1%
Eff/ Tax Rate - 3 Yr. Avg. 37.4%
Payout Ratio 0%

CI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CI stock intrinsic value calculation we used $39703 million for the last fiscal year's total revenue generated by Cigna. The default revenue input number comes from 2016 income statement of Cigna. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CI stock valuation model: a) initial revenue growth rate of 4.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.7%, whose default value for CI is calculated based on our internal credit rating of Cigna, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Cigna.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CI stock the variable cost ratio is equal to 91.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.8% for Cigna.

Corporate tax rate of 27% is the nominal tax rate for Cigna. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CI are equal to 5.1%.

Life of production assets of 13.2 years is the average useful life of capital assets used in Cigna operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CI is equal to 0.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $13723 million for Cigna - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 255.65 million for Cigna is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Cigna at the current share price and the inputted number of shares is $46.0 billion.

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COMPANY NEWS

▶ Healthcare Management Stocks Look Too Pricey for Activists   [Aug-14-17 04:11PM  TheStreet.com]
▶ Cigna tops Street 2Q forecasts   [Aug-04-17 09:12PM  Associated Press]
▶ Apple, 2 Top iPhone Chip Stocks, Jobs Headline Friday's Action Plan   [Aug-03-17 04:25PM  Investor's Business Daily]
▶ NC's Blue Cross cutting rate request on individual policies   [Aug-02-17 01:21PM  Associated Press]
▶ Technology and health care lift stocks to record highs   [Jul-19-17 04:37PM  Associated Press]
▶ Asian shares mostly higher as focus turns to central bankers   [Jul-18-17 11:25PM  Associated Press]
▶ [$$] Anthem's New Chapter After Cigna   [Jul-13-17 11:17AM  Barrons.com]
▶ Cigna Global Health Benefits Introduces Market Leading App   [Jul-12-17 03:57PM  Business Wire]
▶ [$$] GOP Health Plan to Boost Cigna   [Jun-24-17 12:14AM  Barrons.com]
▶ [$$] Cigna Stock Seen Reaching $190   [07:40AM  Barrons.com]
▶ Yahoo Finance Live: Market Movers - Jun 23rd, 2017   [07:20AM  Yahoo Finance Video]
▶ Cigna exits Maryland's individual health insurance marketplace   [02:35PM  American City Business Journals]
▶ [$$] Cigna Can Return to Medicare Advantage, Prescription-Drug Plans   [Jun-16-17 04:58PM  The Wall Street Journal]
Stock chart of CI Financial statements of CI
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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