Attractive Price-to-Sales Ratio
Low EV-to-Sales Ratio
Strong Gross Profit Margin
Good Free Cash Flow Per Share
Strong Interest Coverage
Manageable Debt Levels
🌟 Strong Membership Growth
📈 Improved Operating Efficiency
🏆 Clinical Excellence Focus
🚀 Growth in Medicaid Sector
🔍 Focus on Stars Performance
High Price-to-Earnings Ratio
High EV-to-EBITDA Ratio
Low Net Profit Margin
Weak Operating Profit Margin
Poor Liquidity Ratios
⚠️ Margin Pressure from D SNP Attrition
🔄 Regulatory Challenges
🕰️ Uncertainty in 2026 Guidance
📉 Pressure on Group MA Margins
Overall, Humana Inc. demonstrates a solid business model with effective growth strategies and a commitment to improving operational efficiency. However, it faces challenges related to regulatory changes, membership attrition in specific segments, and uncertainty in future guidance, particularly for 2026.
Analysis Date: February 11, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$125.31
Current Market Price: $254.38
IV/P Ratio: 0.49x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-103.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for HUM
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (25.31)
P/B ratio ≤ 1.5 (1.87)
Current ratio ≥ 2.0 (1.42x)
Long-term debt < Net current assets (1.62x)
Margin of safety (-103.0%)
HUM does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
HUM's gross profit margin of 91.91% indicates excellent control over its production costs, reflecting strong pricing power and operational efficiency.
The free cash flow per share of 19.86 suggests that HUM generates substantial cash flow relative to its outstanding shares, providing flexibility for investments or dividends.
The net profit margin of 1.02% is quite low, indicating that HUM retains a small fraction of revenue as profit, which raises concerns about overall profitability.
An operating profit margin of 2.62% suggests that HUM has limited profitability from its core operations, which can be a concern for sustainability.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
7.23%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
-1.49%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
100.00%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
1.02%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
An interest coverage ratio of 4.68 indicates that HUM can comfortably meet its interest obligations, reflecting a solid ability to manage debt.
With a debt-to-equity ratio of 0.72, HUM has a manageable level of debt compared to its equity, indicating a balance between leveraging and financial stability.
The current, quick, and cash ratios are all at 0.0, highlighting significant liquidity concerns which could hinder HUM's ability to cover short-term obligations.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.71x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.42x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
Humana achieved nearly 5% membership growth in 2024 despite facing elevated medical cost trends. This reflects effective pricing strategies and a focus on attracting higher lifetime value segments.
The company improved its operating expense ratio by 40 basis points in 2024 through various efficiency measures, showcasing its ability to manage costs while maintaining performance.
Humana is committed to clinical excellence, with a significant number of care gaps closed in Q4 2024, indicating a strong focus on improving member outcomes which can enhance profitability.
The company faced higher than expected attrition in its Dual Special Needs Plans (D SNP) which may impact its overall membership and profitability in this segment.
The company is navigating significant regulatory headwinds that could affect its operations and profitability, particularly in the Medicare Advantage space.
Humana is expanding its Medicaid footprint, anticipating a growth of 175,000 to 150,000 members in 2025, which can provide a strong revenue base.
The company is actively working to improve its STAR ratings to achieve at least a 3% margin in individual Medicare Advantage plans, indicating a strategic focus on long-term profitability.
Humana has expressed caution regarding its 2026 financial outlook, heavily influenced by ongoing litigation and regulatory changes, which adds a layer of uncertainty to future earnings.
The group MA market is experiencing margin pressure due to evolving industry dynamics and competitive landscape, which may hinder growth in this segment.