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Is a Beat in the Cards for Centene's (CNC) Q2 Earnings?

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Centene Corporation (CNC - Free Report) will release second-quarter 2019 results on Jul 23, before the market opens. In the last reported quarter, the company delivered adjusted earnings per share of $1.39, beating the Zacks Consensus Estimate by 5.3% on the back of higher revenues and Fidelis Care purchase.

Let’s see, how things are shaping up prior to this announcement.

The company’s performance would likely be supported by its solid Government and Medicaid businesses in the to-be-reported quarter. The Zacks Consensus Estimate for earnings is pegged at $1.25, up 38.9% from the year-ago reported figure.

Moreover, the top line is likely to be boosted by higher membership and the company’s constant efforts to expand through programs. The Zacks Consensus Estimate for second-quarter revenues stands at $17.9 billion, indicating a rise of nearly 26.8% from the prior-year reported number.

Medicaid membership is expected to increase, driven by new contracts. The Zacks Consensus Estimate for total membership stands at 14.6 billion, up 14.3% from the year-earlier reported figure while total at-risk membership is pinned at 11.8 billion, up 21% from the year-ago reported number.

The company’s marketplace business is projected to perform well in the to-be-reported quarter.

The Zacks Consensus Estimate for second-quarter general and administrative expense ratio is pegged at 9.41%, suggesting a decline from the year-ago quarter's reported figure of 9.60%.

However, long-term debt might continue to dent the margins in the second quarter.

Interest expenses of the company are also anticipated to escalate persistently.

What the Quantitative Model States

Our proven model does not conclusively show that Centene is likely to beat on earnings this reporting cycle. This is because the stock has the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen, 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 -0.56%. This is because the Most Accurate Estimate is pegged at $1.24, lower than the Zacks Consensus Estimate of $1.25. 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.

We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Some other stocks worth considering from the medical sector with the perfect mix of elements to also surpass estimates in the next releases are as follows:

Acadia Healthcare Company, Inc. (ACHC - Free Report) is set to report second-quarter earnings on Jul 29. The stock has a Zacks Rank of 1 and an Earnings ESP of +4.30%.

WellCare Health Plans, Inc. is slated to announce second-quarter earnings on Jul 30. The stock has an Earnings ESP of +1.43% and a Zacks Rank #3.

Tenet Healthcare Corporation (THC - Free Report) is set to report second-quarter earnings on Aug 5. The stock has a Zacks Rank of 3 and an Earnings ESP of +1.85%.

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