Cigna (CI): Can The Stock Surprise This Earnings Season?

Cigna Corp. (NYSE:CI) is scheduled to report first-quarter 2016 results on May 6. In the last quarter, this company delivered a 5.06% positive earnings surprise. Let’s see how things are shaping up for this announcement.

Factors Influencing this Past Quarter

Cigna is likely to benefit from its strong membership driven by organic growth in the Middle Market, International, Select and Medicare segments. Exposure to the Medicare Advantage market is expected to add to the upside.

Evolving Global Supplemental Benefits should also support Cigna’s results as the insurer has a strong market position and strategic investments in the same.

However, restrictions to market or sell Medicare Advantage policies or Part D drug plans to new clients may weigh on its top line. Adverse effect of forex and higher expenses are expected to taper the bottom line.

With respect to the surprise trend, Cigna surpassed expectations in each of the last four quarters, with an average beat of 5.69%.

The company’s share price has been fluctuating over the last few days. We wait to see how the stock reacts to the quarter’s results.

Earnings Whispers

Our proven model does not conclusively show that Cigna will beat the Zacks Consensus Estimate in the first quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. But this is not the case here as elaborated below.

Zacks ESP: Cigna has an Earnings ESP of +0.46%. This is because the Most Accurate estimate stands at $2.18 while the Zacks Consensus Estimate is pegged lower at $2.17.

Zacks Rank: Cigna has a Zacks Rank #4 (Sell). The Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Stocks to Consider

Here are some companies that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

Physicians Realty Trust (NYSE:DOC) has an Earnings ESP of +4.35% and a Zacks Rank #3. The company is scheduled to report first-quarter earnings results on May 5.

Fidus Investment Corporation (NASDAQ:FDUS) has an Earnings ESP of +2.44% and a Zacks Rank #1. The company is scheduled to report first-quarter earnings results on May 5.

Garrison Capital Inc (NASDAQ:GARS) has an Earnings ESP of +6.25% and a Zacks Rank #3. The company is scheduled to report first-quarter earnings results on May 9.