Earnings Preview: Aetna Inc

| About: Aetna, Inc. (AET)

Aetna Inc (NYSE:AET) is expected to report Q4 earnings on Wednesday, February 1 before the market open.


For fiscal year 2011, analysts estimate that AET will earn $5.16. For the 3rd quarter of fiscal year 2011, AET announced earnings per share of $1.30, representing 25% of the total annual estimate. For fiscal year 2012, analysts estimate that AET's earnings per share will decline by 1% to $5.09. AET's current quarter consensus estimate has increased over the past 90 days from 0.87 to 0.98, a gain of 13.1%. This improvement is significantly greater than its Industry average of 1.0% during the same time period. The consensus range is between $0.87 and $1.20 with an average of $0.98 according to 20 analysts reviewed. Of the past six earnings reports, AET has six positive surprises of 22%, 25.1%, 47.3%, 1.4%, 48.6%, and 42.3% respectively.

On 01/26/12, AET closed at $42.61, 7.4% below its 52-week high and 31.0% above its 52-week low. AET shares are currently trading 1.8% above their 50-day moving average of $41.87, and 4.0% above their 200-day moving average of $40.97. AET offers an $0.18 dividend yielding 1.61%.

This stock is up 18% since I mentioned it in my article here, and I believe it is still on the rise and will have a seventh consecutive surprise earnings report. Reacting to disappointing results in its Health Care segment in 2002, AET has been involved in a number of strategic and operational initiatives. From 2003 to 2010, health plan enrollment members grew from 13.0 million to 18.5 million, operating revenue from $16.8 billion to $31.0 billion, and operating EPS surged from $1.30 to $3.93, before declining to $2.75 in 2009, partly on AET's need to add to reserves for medical costs related to prior-year claims, before recovering to $3.68 in 2010 and growing since.

With the debates about healthcare in Washington I think healthcare stocks like AET have flown under the radar, but it is never too late to buy. Look for surprise earnings results on Wednesday.

Disclosure: I am long AET.

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Tagged: , Health Care Plans, Earnings
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