02-16-2021, 11:29 PM
2018 CVS and Aetna merger leaves CVS undervalued
<!-- SC_OFF --><div class="md"><p>I believe that CVS could be undervalued since it's merger with Aetna by comparing the current price of competitor insurance companies and their market caps.</p> <p>CVS is currently at $74 (MKT Cap of $97B) while Aetna ended at $212 (MKT Cap of $70B). It seems surprising that CVS stock hasn't really recovered from the initial merger (decline in stock around the purchase) when the Aetna was the 3rd largest insurer at the time.</p> <p>CVS is currently running at a lower PE Ratio of 11.46 and their Free Cash Flow is up ~20%TTM. Competitor insurance companies are priced at</p> <ol> <li>$206 Cigna (CI) with a PE of 10.77 and a MKT cap of $73B</li> <li>$380 Humana (HUM) with a PE of 15 and a MKT cap of $49B</li> </ol> <p>Any ideas on how there can it be that there is such a discrepancy here?</p> <p>CVS Stock: <a href="https://www.investing.com/equities/cvs-corp">https://www.investing.com/equities/cvs-corp</a></p> <p>Article on merger: <a href="https://www.cnbc.com/2018/11/28/cvs-creates-new-health-care-giant-as-69-billion-aetna-merger-closes.html">https://www.cnbc.com/2018/11/28/cvs-creates-new-health-care-giant-as-69-billion-aetna-merger-closes.html</a></p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/valueinv500"> /u/valueinv500 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/ll4fam/2018_cvs_and_aetna_merger_leaves_cvs_undervalued/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/ll4fam/2018_cvs_and_aetna_merger_leaves_cvs_undervalued/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>I believe that CVS could be undervalued since it's merger with Aetna by comparing the current price of competitor insurance companies and their market caps.</p> <p>CVS is currently at $74 (MKT Cap of $97B) while Aetna ended at $212 (MKT Cap of $70B). It seems surprising that CVS stock hasn't really recovered from the initial merger (decline in stock around the purchase) when the Aetna was the 3rd largest insurer at the time.</p> <p>CVS is currently running at a lower PE Ratio of 11.46 and their Free Cash Flow is up ~20%TTM. Competitor insurance companies are priced at</p> <ol> <li>$206 Cigna (CI) with a PE of 10.77 and a MKT cap of $73B</li> <li>$380 Humana (HUM) with a PE of 15 and a MKT cap of $49B</li> </ol> <p>Any ideas on how there can it be that there is such a discrepancy here?</p> <p>CVS Stock: <a href="https://www.investing.com/equities/cvs-corp">https://www.investing.com/equities/cvs-corp</a></p> <p>Article on merger: <a href="https://www.cnbc.com/2018/11/28/cvs-creates-new-health-care-giant-as-69-billion-aetna-merger-closes.html">https://www.cnbc.com/2018/11/28/cvs-creates-new-health-care-giant-as-69-billion-aetna-merger-closes.html</a></p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/valueinv500"> /u/valueinv500 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/ll4fam/2018_cvs_and_aetna_merger_leaves_cvs_undervalued/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/ll4fam/2018_cvs_and_aetna_merger_leaves_cvs_undervalued/">[comments]</a></span>Kind Regards R