Reviewing Cigna Group (NYSE:CI) and Select Medical (NYSE:SEM)

Select Medical (NYSE:SEM) and Cigna Group (NYSE:CI) are both medical companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.

Insider and Institutional Ownership

89.5% of Select Medical shares are owned by institutional investors. Comparatively, 87.0% of Cigna Group shares are owned by institutional investors. 11.6% of Select Medical shares are owned by company insiders. Comparatively, 0.7% of Cigna Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Select Medical pays an annual dividend of $0.25 per share and has a dividend yield of 1.7%. Cigna Group pays an annual dividend of $6.04 per share and has a dividend yield of 2.2%. Select Medical pays out 29.1% of its earnings in the form of a dividend. Cigna Group pays out 26.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Cigna Group has raised its dividend for 5 consecutive years. Cigna Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Select Medical and Cigna Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Select Medical	2.05%	7.41%	2.62%
Cigna Group	2.29%	18.80%	5.01%

Earnings & Valuation

This table compares Select Medical and Cigna Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Select Medical	$5.19 billion	0.35	$214.04 million	$0.86	17.25
Cigna Group	$247.12 billion	0.30	$3.43 billion	$22.67	12.07

Cigna Group has higher revenue and earnings than Select Medical. Cigna Group is trading at a lower price-to-earnings ratio than Select Medical, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Select Medical and Cigna Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Select Medical	1	1	4	0	2.50
Cigna Group	1	3	19	1	2.83

Select Medical currently has a consensus price target of $17.80, indicating a potential upside of 19.99%. Cigna Group has a consensus price target of $331.83, indicating a potential upside of 21.23%. Given Cigna Group’s stronger consensus rating and higher probable upside, analysts clearly believe Cigna Group is more favorable than Select Medical.

Volatility & Risk

Select Medical has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500. Comparatively, Cigna Group has a beta of 0.26, meaning that its share price is 74% less volatile than the S&P 500.

Summary

Cigna Group beats Select Medical on 13 of the 18 factors compared between the two stocks.

About Select Medical

Select Medical Holdings Corporation, through its subsidiaries, operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers in the United States. It operates in four segments: Critical Illness Recovery Hospital, Rehabilitation Hospital, Outpatient Rehabilitation, and Concentra. The Critical Illness Recovery Hospital segment consists of hospitals that provide services for heart failure, infectious disease, respiratory failure and pulmonary disease, surgery requiring prolonged recovery, renal disease, neurological events, and trauma. The Rehabilitation Hospital segment offers therapy and rehabilitation treatments, including rehabilitative services for brain and spinal cord injuries, strokes, amputations, neurological disorders, orthopedic conditions, pediatric congenital or acquired disabilities, and cancer. The Outpatient Rehabilitation segment operates rehabilitation clinics that provide physical, occupational, and speech rehabilitation programs and services; and specialized programs, such as functional programs for work related injuries, hand therapy, post-concussion rehabilitation, pediatric and cancer rehabilitation, and athletic training services. The Concentra segment operates and provides occupational health centers, telemedicine platforms, onsite clinics, and contract services at employer worksites that deliver occupational health services, consumer health, physical therapy, and preventive care. Select Medical Holdings Corporation was founded in 1996 and is headquartered in Mechanicsburg, Pennsylvania.

About Cigna Group

The Cigna Group, together with its subsidiaries, provides insurance and related products and services in the United States. Its Evernorth Health Services segment provides a range of coordinated and point solution health services, including pharmacy benefits, home delivery pharmacy, specialty pharmacy, distribution, and care delivery and management solutions to health plans, employers, government organizations, and health care providers. The company's Cigna Healthcare segment offers medical, pharmacy, behavioral health, dental, and other products and services for insured and self-insured customers; Medicare Advantage, Medicare Supplement, and Medicare Part D plans for seniors, as well as individual health insurance plans; and health care coverage in its international markets, as well as health care benefits for mobile individuals and employees of multinational organizations. In addition, it offers permanent insurance contracts sold to corporations to provide coverage on the lives of certain employees for financing employer-paid future benefit obligations. The company distributes its products and services through insurance brokers and consultants; directly to employers, unions and other groups, or individuals; and private and public exchanges. The company was formerly known as Cigna Corporation and changed its name to The Cigna Group in February 2023. The Cigna Group was founded in 1792 and is headquartered in Bloomfield, Connecticut.