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Where Centene Corporation (NYSE:CNC) Stands In Terms Of Earnings Growth Against Its Industry

Simply Wall St

Measuring Centene Corporation's (NYSE:CNC) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess CNC's recent performance announced on 30 June 2019 and weigh these figures against its long-term trend and industry movements.

Check out our latest analysis for Centene

How CNC fared against its long-term earnings performance and its industry

CNC's trailing twelve-month earnings (from 30 June 2019) of US$1.3b has jumped 19% compared to the previous year.

However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 34%, indicating the rate at which CNC is growing has slowed down. What could be happening here? Well, let's examine what's transpiring with margins and if the rest of the industry is feeling the heat.

NYSE:CNC Income Statement, October 22nd 2019

In terms of returns from investment, Centene has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. Furthermore, its return on assets (ROA) of 4.9% is below the US Healthcare industry of 5.2%, indicating Centene's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Centene’s debt level, has increased over the past 3 years from 10% to 12%.

What does this mean?

Though Centene's past data is helpful, it is only one aspect of my investment thesis. While Centene has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research Centene to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for CNC’s future growth? Take a look at our free research report of analyst consensus for CNC’s outlook.
  2. Financial Health: Are CNC’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.