Humana Stock Buy Recommendation Reiterated (HUM)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Humana (NYSE: HUM) has been reiterated by TheStreet Ratings as a buy with a ratings score of A-. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 90.7% when compared to the same quarter one year prior, rising from $248.00 million to $473.00 million.
  • HUM's revenue growth trails the industry average of 13.2%. Since the same quarter one year prior, revenues slightly increased by 2.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • HUM's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, HUM has a quick ratio of 1.56, which demonstrates the ability of the company to cover short-term liquidity needs.
  • HUMANA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HUMANA INC reported lower earnings of $7.46 versus $8.44 in the prior year. This year, the market expects an improvement in earnings ($8.60 versus $7.46).

Humana Inc., a health care company, offers insurance products and health and wellness services that incorporate an integrated approach to lifelong well-being. The company operates in three segments: Retail, Employer Group, and Health and Well-Being Services. Humana has a market cap of $12.5 billion and is part of the health care sector and health services industry. The company has a P/E ratio of 9.00, below the S&P 500 P/E ratio of 18.00. Shares are up 15.9% year to date as of the close of trading on Wednesday.

You can view the full Humana Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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