Aetna Meets on the Top Line, Misses Where it Counts

Aetna (NYSE: AET  ) reported earnings on Jan. 31. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Aetna met expectations on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue increased and GAAP earnings per share dropped significantly.

Margins dropped across the board.

Revenue details
Aetna booked revenue of $8.96 billion. The six analysts polled by S&P Capital IQ hoped for a top line of $8.93 billion on the same basis. GAAP reported sales were 16% higher than the prior-year quarter's $8.57 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.94. The 20 earnings estimates compiled by S&P Capital IQ forecast $0.96 per share. GAAP EPS of $0.57 for Q4 were 44% lower than the prior-year quarter's $1.02 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 23.9%, 570 basis points worse than the prior-year quarter. Operating margin was 4.2%, 360 basis points worse than the prior-year quarter. Net margin was 1.9%, 240 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $9.51 billion. On the bottom line, the average EPS estimate is $1.43.

Next year's average estimate for revenue is $39.73 billion. The average EPS estimate is $5.54.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 597 members out of 644 rating the stock outperform, and 47 members rating it underperform. Among 224 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 213 give Aetna a green thumbs-up, and 11 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Aetna is outperform, with an average price target of $52.80.

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