Should Value Investors Buy Centene (CNC) Stock?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Centene (CNC). CNC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 11.48 right now. For comparison, its industry sports an average P/E of 16.75. CNC's Forward P/E has been as high as 14.34 and as low as 9.31, with a median of 10.44, all within the past year.
Investors should also note that CNC holds a PEG ratio of 0.89. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CNC's PEG compares to its industry's average PEG of 1.24. Over the past 52 weeks, CNC's PEG has been as high as 1.07 and as low as 0.71, with a median of 0.87.
Another notable valuation metric for CNC is its P/B ratio of 1.61. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 3.91. Over the past 12 months, CNC's P/B has been as high as 1.93 and as low as 1.29, with a median of 1.48.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CNC has a P/S ratio of 0.27. This compares to its industry's average P/S of 0.56.
Finally, our model also underscores that CNC has a P/CF ratio of 10.93. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. CNC's P/CF compares to its industry's average P/CF of 15.48. Over the past 52 weeks, CNC's P/CF has been as high as 16.67 and as low as 8.17, with a median of 12.07.
These are only a few of the key metrics included in Centene's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, CNC looks like an impressive value stock at the moment.
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Centene Corporation (CNC) : Free Stock Analysis Report
