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What's in the Cards for Centene's (CNC) Earnings in Q4?

Zacks Equity Research

Centene Corporation CNC will release fourth-quarter 2019 results on Feb 4, before the market opens.

For the to-be reported quarter, we expect to see an increase in revenues and membership. Let’s see how things are shaping up prior to this announcement.
For the to-be-reported quarter, the Zacks Consensus Estimate for its bottom line is pegged at 74 cents, indicating an increase of 7.2% from the year-ago reported figure.

The company’s fourth-quarter performance is likely to have been supported by its solid Government and Medicaid businesses. However, revenues are expected to have been partially offset by state-directed payments previously mentioned.

The consensus mark for the company’s top line suggests an upside of 11.6% from the year-earlier reported figure. Other factors, such as higher membership might also have provided a cushion to the revenue base.

The company’s upcoming quarterly results are likely to reflect growth in its Marketplace business. It is expected to have gained members on the back of several contract wins and new programs. The Zacks Consensus Estimate for the company's total membership count implies a rise of 6% from the prior-year reported number.

The quarter to be reported is likely to have witnessed higher premiums. The consensus estimate for the same hints at 13.3% growth from the year-ago reported figure.

The Zacks Consensus Estimate for fourth-quarter general and administrative expense ratio is pegged at 9.45%, suggesting a decline from 9.90% in the same period last year.

However, interest expenses of the company are anticipated to have escalated persistently.

What the Quantitative Model States

Our proven model does not conclusively predict an earnings beat for Centene this reporting cycle. The right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Centene has an Earnings ESP of -2.26%. This is because the Most Accurate Estimate is pegged at 72 cents, lower than the Zacks Consensus Estimate of 74 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Centene Corporation Price and EPS Surprise

Centene Corporation Price and EPS Surprise

Centene Corporation price-eps-surprise | Centene Corporation Quote

 

Zacks Rank: Centene carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP in the combination leaves surprise prediction inconclusive for the stock this earnings season.

Highlights of Q3 Earnings and Surprise History

Centene delivered third-quarter 2019 adjusted earnings per share of 96 cents, beating the Zacks Consensus Estimate by 1.1%. Also, the bottom line improved 5.6% year over year on the back of higher revenues.

The company boasts a stellar earnings record, having delivered a positive surprise in all the trailing four quarters, the average being 4.5%.

Stocks to Consider

Here are a few stocks worth considering with the perfect mix of elements to beat on earnings in the respective upcoming releases:

Encompass Health Corporation EHC is slated to report fourth-quarter earnings on Feb 26. It has a Zacks Rank of 3 and an Earnings ESP of +3.57%.

Molina Healthcare, Inc MOH is set to report fourth-quarter earnings on Feb 10. The company is Zacks #3 Ranked and has an Earnings ESP of +0.38%.

Teladoc Health, Inc. TDOC is slated to announce fourth-quarter earnings on Feb 26. The stock has an Earnings ESP of +9.38% and is a #3 Ranked player.

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