Centene (CNC) Gears Up for Q4 Earnings: What Lies Ahead?
Centene Corporation CNC is set to report fourth-quarter 2021 results on Feb 8, before the opening bell.
In the last reported quarter, the leading multi-national healthcare company reported adjusted earnings per share of $1.26, missing the Zacks Consensus Estimate of $1.29 due to elevated selling, general and administrative costs.
Centene missed the consensus estimate in three of the prior four quarters and beat once, with the average negative earnings surprise being 3.2%. This is depicted in the graph below:
Centene Corporation Price and EPS Surprise
Centene Corporation price-eps-surprise | Centene Corporation Quote
Let’s see how things have shaped up prior to the fourth-quarter earnings announcement.
Trend in Estimate Revision
The Zacks Consensus Estimate for fourth-quarter earnings per share of 98 cents has witnessed one upward revision and no downward movement in the past 30 days. The estimated figure suggests an increase from the prior-year figure of 46 cents per share.
The consensus estimate for fourth-quarter revenues of $32.6 billion indicates a 15.3% increase from the year-ago reported figure.
Factors to Note
Centene’s performance for the to-be-reported quarter is likely to have gained from improved volumes and contribution from both Medicaid and Medicare businesses. The top line is likely to have benefited from better premiums, growth in the Health Insurance Marketplace business, plus expansions and new programs across many states. Membership growth is also likely to have contributed to this upside.
The Zacks Consensus Estimate for the company’s premiums is pegged at $29,181 million, which indicates an improvement from the prior-year reported figure of $25,559 million. This is likely to have positioned CNC for year-over-year growth.
Centene’s performance is expected to have received a boost from its leading nationwide position in government-sponsored healthcare. The company is likely to have witnessed higher enrolment in the Medicare Advantage business in the to-be-reported quarter. Its Health Insurance Marketplace business might have witnessed an improved performance on the back of consistent pricing discipline and higher retention rates.
Medical membership of the company has been rising over the past several quarters on contract wins and expansion across different regions, and the momentum is expected to have continued in the fourth quarter. The consensus estimate for total membership suggests growth of 4.2% from the year-ago reported figure.
Yet, rising operating expenses in the quarter under review may have put pressure on the bottom line. Also, Centene is likely to have suffered from lower investment income. The consensus mark for Investment and other income is pegged at $75 million, indicating a decline from $105 million a year ago, making an earnings beat uncertain.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Centene this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here as you will see below.
Earnings ESP: The company’s Earnings ESP is -2.56%. This is because the Most Accurate Estimate is currently pegged at earnings of 95 cents per share, lower than the Zacks Consensus Estimate of 98 cents.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Centene currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for Centene, here are some companies from the medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Community Health Systems, Inc. CYH has an Earnings ESP of +23.00% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Community Health Systems’ 2021 earnings suggests an increase of 257.8% year over year.
Universal Health Services, Inc. UHS has an Earnings ESP of +2.33% and is a Zacks #3 Ranked player.
The consensus estimate for Universal Health Services’ bottom line for 2021 indicates 5.3% year-over-year growth.
Amgen Inc. AMGN has an Earnings ESP of +2.53% and a Zacks Rank #3.
The Zacks Consensus Estimate for Amgen’s 2021 earnings suggests an increase of 1.5% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Amgen Inc. (AMGN) : Free Stock Analysis Report
Universal Health Services, Inc. (UHS) : Free Stock Analysis Report
Community Health Systems, Inc. (CYH) : Free Stock Analysis Report
Centene Corporation (CNC) : Free Stock Analysis Report
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