Is The Market Rewarding Humana Inc. (NYSE:HUM) With A Negative Sentiment As A Result Of Its Mixed Fundamentals?

Simply Wall St.11-23 20:00

It is hard to get excited after looking at Humana's (NYSE:HUM) recent performance, when its stock has declined 16% over the past three months. We, however decided to study the company's financials to ...

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(NYSE:HUM) With A Negative Sentiment As A Result Of Its Mixed Fundamentals?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-23 20:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/market-rewarding-humana-inc-nyse-120022500.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>It is hard to get excited after looking at Humana's (NYSE:HUM) recent performance, when its stock has declined 16% over the past three months. We, however decided to study the company's financials to ...</p>\n\n<a href=\"https://finance.yahoo.com/news/market-rewarding-humana-inc-nyse-120022500.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0348723411.USD","symbol_name":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","start_time":0,"source_url":"https://finance.yahoo.com/news/market-rewarding-humana-inc-nyse-120022500.html","article_id":"2485053632","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/TYuERtMVEDQGKcCkp9IFlQ--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/12fdf750b0f25a3272d08040d0ccad91"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485053632","pubTimestamp":1732363222,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"It is hard to get excited after looking at Humana's  recent performance, when its stock has declined 16% over the past three months. We, however decided to study the company's financials to determine if they have got anything to do with the price decline. Stock prices are usually driven by a company’s financial performance over the long term, and therefore we decided to pay more attention to the company's financial performance. Specifically, we decided to study Humana's  ROE in this article.Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In short, ROE shows the profit each dollar generates with respect to its shareholder investments.So, based on the above formula, the ROE for Humana is:","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","LU0211331839.USD":"FRANKLIN MUTUAL GLB DISCOVERY \"A\" (USD) ACC","LU1093756168.USD":"FRANKLIN K2 ALTERNATIVE STRATEGIES \"A\" (USD) ACC","SG9999014021.USD":"UNITED GLOBAL DURABLE EQUITIES (USDHDG) ACC","LU0238689110.USD":"贝莱德环球动力股票基金","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","LU0170899867.USD":"EASTSPRING INVESTMENTS WORLD VALUE EQUITY  \"A\" (USD) ACC","HUM":"哈门那","LU1983260115.SGD":"Janus Henderson Horizon Global Sustainable Equity A2 SGD-H","LU0390134368.USD":"FRANKLIN GLOBAL GROWTH \"A\" (USD) ACC","LU1093756325.SGD":"FTIF - Franklin K2 Alt Strat Fd A (acc) SGD-H1","LU0266013472.USD":"AXA WF - Framlington Longevity Economy A Cap USD","LU0208291251.USD":"FRANKLIN MUTUAL U.S. VALUE \"A\" (USD) INC","NYSE":"纽交所","BK4585":"ETF&股票定投概念","SG9999014005.SGD":"United Global Durable Equities Fund Acc SGD","SG9999014013.SGD":"United Global Durable Equities Fund Dis SGD","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4566":"资本集团","LU0320765489.SGD":"FTIF - Franklin Mutual US Value A Acc SGD","LU0070302665.USD":"FRANKLIN MUTUAL U.S. VALUE \"A\" (USD) ACC","BK4588":"碎股","BK4154":"管理型保健护理","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC"},"translate_title":"由于Humana Inc.（纽约证券交易所股票代码：HUM）的基本面好坏参半，市场是否会对其产生负面情绪？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"NYSE":1,"HUM":1},"content_text":"It is hard to get excited after looking at Humana's (NYSE:HUM) recent performance, when its stock has declined 16% over the past three months. We, however decided to study the company's financials to determine if they have got anything to do with the price decline. Stock prices are usually driven by a company’s financial performance over the long term, and therefore we decided to pay more attention to the company's financial performance. Specifically, we decided to study Humana's  ROE in this article. \n Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In short, ROE shows the profit each dollar generates with respect to its shareholder investments. \n Check out our latest analysis for Humana \n How Do You Calculate Return On Equity? \n ROE can be calculated by using the formula: \n Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity \nSo, based on the above formula, the ROE for Humana is:\n7.7% = US$1.4b ÷ US$18b (Based on the trailing twelve months to September 2024).\n The 'return' refers to a company's earnings over the last year. So, this means that for every $1 of its shareholder's investments, the company generates a profit of $0.08. \n Why Is ROE Important For Earnings Growth? \n Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Based on how much of its profits the company chooses to reinvest or \"retain\", we are then able to evaluate a company's future ability to generate profits. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes. \n Humana's Earnings Growth And 7.7% ROE \n At first glance, Humana's ROE doesn't look very promising. A quick further study shows that the company's ROE doesn't compare favorably to the industry average of 13% either. Therefore, it might not be wrong to say that the five year net income decline of 7.5% seen by Humana was probably the result of it having a lower ROE. However, there could also be other factors causing the earnings to decline. For instance, the company has a very high payout ratio, or is faced with competitive pressures. \n That being said, we compared Humana's performance with the industry and were concerned when we found that while the company has shrunk its earnings, the industry has grown its earnings at a rate of 5.4% in the same 5-year period. \n\n\n\n  NYSE:HUM Past Earnings Growth November 23rd 2024\n \n\n Earnings growth is a huge factor in stock valuation. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. Doing so will help them establish if the stock's future looks promising or ominous. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if Humana is trading on a high P/E or a low P/E, relative to its industry. \n Is Humana Making Efficient Use Of Its Profits? \n When we piece together Humana's low three-year median payout ratio of 14% (where it is retaining 86% of its profits), calculated for the last three-year period, we are puzzled by the lack of growth. The low payout should mean that the company is retaining most of its earnings and consequently, should see some growth. So there might be other factors at play here which could potentially be hampering growth. For instance, the business has faced some headwinds. \n Moreover, Humana has been paying dividends for at least ten years or more suggesting that management must have perceived that the shareholders prefer dividends over earnings growth. Our latest analyst data shows that the future payout ratio of the company is expected to rise to 20% over the next three years. However, Humana's future ROE is expected to rise to 10% despite the expected increase in the company's payout ratio. We infer that there could be other factors that could be driving the anticipated growth in the company's ROE. \n Summary \n In total, we're a bit ambivalent about Humana's performance. Even though it appears to be retaining most of its profits, given the low ROE, investors may not be benefitting from all that reinvestment after all. The low earnings growth suggests our theory correct. Having said that, looking at current analyst estimates, we found that the company's earnings growth rate is expected to see a huge improvement. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485053632"}