In accordance with the U.S. Securities and Exchange Commission, Humana Inc. (HUM) has decided to reiterate its earnings guidance for 2011 at $6.70-$6.90.
Humana issued its first earnings outlook in April 26, reaffirmed the same in May, when Humana reported its first-quarter earnings of 2011.
According to Humana, the members of senior management have planned to meet with investors at the end of the month June 2011 and expect to reaffirm the company’s earnings per share estimate at $6.70 to $6.90 for 2011.
On May 2, Humana reported its first-quarter operating earnings of $1.55 per share, surpassing the Zacks Consensus Estimate of $1.45 per share and the prior year earnings of $1.15 per share.
Humana’s impressive performance was due to higher year-over-year earnings in the Humana’s Employer Group and Health and Well-Being Services business segments, partially offset by lower earnings in the company’s Retail business segment.
In addition, higher net income year over year enhanced the cash flows provided by operations to $795.5 million in the first quarter, as against $754.7 million in the year-ago period.
Moreover in December 2009, Humana’s Board renewed its share authorization for the use of up to $250 million for the repurchase of Humana common shares. During the first quarter of 2011, Humana repurchased 825,000 shares at an average price of $63.73.
On April 28, 2011, Humana’s Board also replaced its previous share repurchase authorization with a new authorization for share repurchases of up to $1 billion by June 30, 2013.
On the same day, Humana’s Board also initiated a quarterly cash dividend to stockholders, declaring a cash dividend of 25 cents per share for stockholders of record as of June 30, 2011. The dividend will be paid on July 28, 2011. Humana is expected to spend about $42.5 million per quarter on its new dividend.
In addition to the dividend declaration and the increase of the stock buyback plan, Humana hiked its fiscal 2011 earnings forecast to a range of $6.70 to $6.90 per share from $5.95 to $6.15 per share. The new forecast represents a growth of about 4%-7% over 2010 earnings of $6.47 per share, against its previous expectation of a decline in 2011.
With the dividend announcement, Humana became the fourth largest health insurer to announce a larger dividend payment in the past year. WellPoint Inc. (WLP) also paid a quarterly cash dividend of 25 cents per share in the first quarter of 2011, reported on April 27.
The quantitative Zacks #3 Rank (short term ‘Hold’ rating) on the stock indicates no directional pressure on the shares over the near term.
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