Humana Could Be Affected by the Trump Administration and the Repeal of Obamacare

Humana is a company that is in the healthcare insurance industry. Insurance covers many different market sectors and products, but what makes the healthcare sector more volatile is that the new Trump administration is going to repeal Obamacare, changing the landscape of insurance coverage once again. Sure the company has to contend with the obvious competition and regulation, but having to contend with the government is just another aspect you have to keep in mind before investing. Now, let us take a look at their most recent quarterly number to see if they are on the right track.

Published over a year ago
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Reviewed by Vlad Skutelnik

These numbers are going to represent the third quarter of 2016 as stated in their recent 8-K filing. The report states that earnings per share came in at $2.98 on a GAAP basis and $3.18 with an adjusted earnings per share. Medicare Advantage and Healthcare Services businesses are performing above expectations. All in all, the numbers appear to be healthy and nothing with this surface glance stands out as a red flag. Let us take this and compare it against the chart and see if price is moving in a healthy manner.

Currently, price appears to be coming off a second attempt at creating new highs, which means price does not want to be up there. The down swings have come on heavier volume then the swings up, which indicates there’s not enough strength to the upside to break. Right now, it looks like price wants to keep falling, which would indicate a solid short play. If you’re looking to go long, find a solid support zone and do your homework to ensure that the company can still grow.

Typically, a company's financial statements are the reports that show the financial position of the company. There are three main documents that fall into the category of financial statements. These documents include Humana income statement, its balance sheet, and the statement of cash flows. Potential Humana investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although Humana investors may use each financial statement separately, they are all related. The changes in Humana's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Humana's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.
The goal of Humana fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of Humana performance into the future periods or doing a reasonable stock valuation. The intrinsic value of Humana shares is the value that is considered the true value of the share. If the intrinsic value of Humana is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares Humana. Please read more on our fundamental analysis page.

And What about dividends?

A dividend is the distribution of a portion of Humana earnings, decided and managed by the company's board of directors and paid to a class of its shareholders. Note, announcements of dividend payouts are generally accompanied by a proportional increase or decrease in a company's stock price. Humana dividend payments follow a chronological order of events, and the associated dates are important to determine the shareholders who qualify for receiving the dividend payment. Humana one year expected dividend income is about USD2.23 per share.
Investing in dividend-paying etfs, such as Humana Inc is one of the few strategies that are good for long-term investment. Ex-dividend dates are significant because investors in Humana must own a stock before its ex-dividend date to receive its next dividend.
This type of analysis is very useful when you want to generate a past dividend schedule and payout information for Humana. Then that information in the form of graph and calendar can be used to fully explain how Du Pont dividends can provide a real clue to its valuation.

How important is Humana's Liquidity

Humana financial leverage refers to using borrowed capital as a funding source to finance Humana Inc ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Humana financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Humana's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Humana's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Humana's total debt and its cash.

Detailed Outlook On Humana

Risks

You can take a look at the most recent 10-K filing for a complete list of risks cited by the company, but here are a few to keep in mind. The report states if the company fails to effectively implement their operational and strategic initiatives, that could adversely affect the business. Similar to most businesses, if you have a plan and are unable to execute, it will more often than not have an negative impact on the numbers. Also, since the insurance industry is highly competitive, they have to maintain competitive pricing and services to retain current clients and attract new ones. Lastly, as a potential investor, it would be a good idea to keep an eye on the new Trump presidency as this could affect the industry as a whole.

Conclusion

This is a solid company and should be researched with care. This industry may be experiencing volatility in the near future, but if your portfolio can handle it this may be a sound investment. As with any potential investment, it is a wise decision to consult with an investing professional as they can direct you in the right direction.

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Nathan Young do not own shares of Humana Inc. Please refer to our Terms of Use for any information regarding our disclosure principles.

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