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CNC vs. HUM: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Medical - HMOs sector have probably already heard of Centene (CNC - Free Report) and Humana (HUM - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Centene has a Zacks Rank of #2 (Buy), while Humana has a Zacks Rank of #5 (Strong Sell) right now. Investors should feel comfortable knowing that CNC likely has seen a stronger improvement to its earnings outlook than HUM has recently. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

CNC currently has a forward P/E ratio of 10.94, while HUM has a forward P/E of 12.19. We also note that CNC has a PEG ratio of 0.94. 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. HUM currently has a PEG ratio of 1.01.

Another notable valuation metric for CNC is its P/B ratio of 1.55. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, HUM has a P/B of 2.73.

These metrics, and several others, help CNC earn a Value grade of A, while HUM has been given a Value grade of C.

CNC stands above HUM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CNC is the superior value option right now.


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