We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Centene (CNC) Down 10.5% Since Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Centene (CNC - Free Report) . Shares have lost about 10.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Centene due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Centene's Q2 Earnings Miss Estimates, Revenues Beat
Centene reported second-quarter 2020 adjusted earnings per share of $2.40, missing the Zacks Consensus Estimate of $2.41 by 0.4%. However, the bottom line soared 79.1% year over year on the back of solid revenues. For the second quarter, total revenues surged 51% to $27.7 billion from the year-ago period, primarily aided by the WellCare buyout, growth in Health Insurance Marketplace business, expansions and new programs across many states in 2019 and 2020 as well as the reinstatement of the health insurer fee in 2020. However, this upside was offset by the Illinois health plan divestiture.
Meanwhile, the top line surpassed the consensus mark by 1.2%.
Quarterly Operational Update
As of Jun 30, 2020, managed care membership came in at 24.6 million, up 64% year over year.
Health Benefit Ratio (HBR) for the reported quarter was 82.1% compared with 86.7% in the prior-year period. This decrease can be attributed to the current COVID-19 pandemic.
Adjusted Selling, General & Administrative (SG&A) expense ratio was 8.5% for the quarter compared with 9% for the same period last year.
This year-over-year contraction of 50 basis points can be attributed to the WellCare buyout, and leveraging of costs over higher revenues.
Financial Update
As of Jun 30, 2020, the company's cash and cash equivalents totaled $12.8 billion, up 5.6% from the figure at 2019 end.
As of Jun 30, 2020, total assets were up 66.7% to $68.3 billion from the level at 2019 end.
Centene’s long-term debt summed $16.7 billion, up 22.5% from the figure at 2019 end.
Net cash provided by operating activities as of Jun 30, 2020 was $3.4 billion compared with net cash provided by operating activities of $2.3 billion a year ago.
2020 Outlook
The company now expects revenues in the range of $109-$111.4 billion, lowered from the previous anticipation of $110-$112.4 billion.
Adjusted EPS is anticipated between $4.76 and $4.96, up from the previous projection of $4.56-$4.76 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -7.47% due to these changes.
VGM Scores
Currently, Centene has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Centene has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Centene (CNC) Down 10.5% Since Last Earnings Report?
A month has gone by since the last earnings report for Centene (CNC - Free Report) . Shares have lost about 10.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Centene due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Centene's Q2 Earnings Miss Estimates, Revenues Beat
Centene reported second-quarter 2020 adjusted earnings per share of $2.40, missing the Zacks Consensus Estimate of $2.41 by 0.4%. However, the bottom line soared 79.1% year over year on the back of solid revenues.
For the second quarter, total revenues surged 51% to $27.7 billion from the year-ago period, primarily aided by the WellCare buyout, growth in Health Insurance Marketplace business, expansions and new programs across many states in 2019 and 2020 as well as the reinstatement of the health insurer fee in 2020. However, this upside was offset by the Illinois health plan divestiture.
Meanwhile, the top line surpassed the consensus mark by 1.2%.
Quarterly Operational Update
As of Jun 30, 2020, managed care membership came in at 24.6 million, up 64% year over year.
Health Benefit Ratio (HBR) for the reported quarter was 82.1% compared with 86.7% in the prior-year period. This decrease can be attributed to the current COVID-19 pandemic.
Adjusted Selling, General & Administrative (SG&A) expense ratio was 8.5% for the quarter compared with 9% for the same period last year.
This year-over-year contraction of 50 basis points can be attributed to the WellCare buyout, and leveraging of costs over higher revenues.
Financial Update
As of Jun 30, 2020, the company's cash and cash equivalents totaled $12.8 billion, up 5.6% from the figure at 2019 end.
As of Jun 30, 2020, total assets were up 66.7% to $68.3 billion from the level at 2019 end.
Centene’s long-term debt summed $16.7 billion, up 22.5% from the figure at 2019 end.
Net cash provided by operating activities as of Jun 30, 2020 was $3.4 billion compared with net cash provided by operating activities of $2.3 billion a year ago.
2020 Outlook
The company now expects revenues in the range of $109-$111.4 billion, lowered from the previous anticipation of $110-$112.4 billion.
Adjusted EPS is anticipated between $4.76 and $4.96, up from the previous projection of $4.56-$4.76 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -7.47% due to these changes.
VGM Scores
Currently, Centene has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Centene has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.