The Cigna Group (NYSE:CI) brings together its Cigna Healthcare insurance business and Evernorth Health Services, which covers pharmacy benefit management and specialty pharmacy operations. By diversifying its business in this way, Cigna can generate earnings from several sources. As a result, we added the company to our best blue-chip dividend stocks list.
However, the company still faces challenges such as regulatory scrutiny, pricing pressure, and rising healthcare costs. In the second quarter of 2026, Cigna’s revenue grew 7% from the previous year, reaching $71.7 billion. Adjusted earnings per share (EPS) climbed to $7.78, up from $7.20, and net income came in at $1.66 billion. Management expressed their confidence in continued growth by raising the 2026 adjusted EPS outlook to at least $30.45.Even with stronger earnings, some risks remain. For example, Cigna Healthcare’s medical care ratio increased to 84.5% from 83.2% a year earlier, which means medical costs took up a larger portion of premiums.
Evernorth is also dealing with regulatory pressure on pharmacy benefit management and could see its margins squeezed as the industry changes how it handles rebates and drug pricing.
A Low Multiple Reflects More Than Value
The Cigna Group trades at a forward P/E ratio of 8.26, compared to a trailing P/E of 11.41. This difference shows that the market expects Cigna’s earnings to rise. With a forward P/E of 8.26, the implied earnings yield is around 12.1%, compared with the 10-year U.S. Treasury yield of 5.21% on October 13, 2026. This represents a spread of approximately 6.9 percentage points, although equity earnings are uncertain and do not represent guaranteed cash returns. Of course, equity earnings aren’t guaranteed cash returns, so this kind of comparison is more illustrative than direct.
Cigna’s valuation has narrowed over time. According to Yahoo’s data, its forward P/E was 11.26 in June 2025 and dropped to 8.87 by September 2025. Right now, Cigna’s forward P/E is lower than CVS Health’s 10.67, which suggests that Cigna is trading at a relative discount. However, it’s important to keep in mind that the two companies differ in their business mix and risk profiles, which can affect direct comparisons. Read their valuation analysis here: CVS Health (CVS) vs Cigna (CI): Which is a Better Stock to Buy?
With a forward P/E of 8.26, it seems the market isn’t entirely convinced that Cigna’s current earnings growth will last. Management’s adjusted EPS floor of $30.45 suggests a forward multiple of about 9.3 at the latest share price of $282.53. This discount could present an opportunity if Evernorth continues to grow and medical costs stabilize. On the other hand, the low multiple might be warranted if regulatory changes or pressures on pharmacy benefit margins start to eat into profits. Since Cigna’s net profit margin is only about 2.3%, there’s not much room for large shocks to the business.
Dividend Safety Rests on Earnings Resilience
The Cigna Group offers an annualized dividend of $6.24 per share, which works out to a 2.20% yield and a payout ratio of 25.38%. Because this payout is relatively modest, there’s room for Cigna to increase it in the future, and it also helps cushion the company if earnings take a hit. While billionaires are showing interest in CI as a dividend stock, three other stocks rank even higher on their radars. Find more here.
For investors, the dividend should be seen as just one piece of the total return, rather than the main reason to buy the stock. Share price gains, earnings growth, and stock buybacks might play a bigger role, although none of these are guaranteed.
Conclusion
Cigna’s low forward multiple, solid implied earnings yield, and manageable dividend payout make it a stock to consider for both income and growth potential. However, the main question is whether the company can sustain its earnings at the current level. Investors should keep an eye on trends in medical costs, Evernorth’s profit margins, and any regulatory changes before viewing the stock’s discounted valuation as a chance for upside rather than a warning sign about risk.
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This article is originally published at Insider Monkey.
