Humana's (NYSE:HUM) five

Stock Analysis

The main point of investing for the long term is to make money. Furthermore, you'd generally like to see the share price rise faster than the market. Unfortunately for shareholders, while the Humana Inc. (NYSE:HUM) share price is up 50% in the last five years, that's less than the market return. Zooming in, the stock is up just 1.5% in the last year.

Since the stock has added US$4.0b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for Humana

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Over half a decade, Humana managed to grow its earnings per share at 23% a year. The EPS growth is more impressive than the yearly share price gain of 9% over the same period. So it seems the market isn't so enthusiastic about the stock these days.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

This free interactive report on Humana's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Humana the TSR over the last 5 years was 56%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

Humana provided a TSR of 2.2% over the last twelve months. Unfortunately this falls short of the market return. On the bright side, the longer term returns (running at about 9% a year, over half a decade) look better. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. Before spending more time on Humana it might be wise to click here to see if insiders have been buying or selling shares.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

What are the risks and opportunities for Humana?

NYSE:HUM

Humana

Humana Inc., together with its subsidiaries, operates as a health and well-being company in the United States.Show more

Rewards

Trading at 55.4% below our estimate of its fair value

Earnings are forecast to grow 10.21% per year

Earnings grew by 7.5% over the past year

Risks

No risks detected for HUM from our risks checks.

Share Price

Market Cap

1Y Return

Further research onHumana

Have 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.

Humana Inc., together with its subsidiaries, operates as a health and well-being company in the United States.

Undervalued with excellent balance sheet.