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Why Is Centene (CNC) Up 2.7% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Centene Corporation (CNC - Free Report) . Shares have added about 2.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Centene’s Q1 Earnings Beat Estimates on HealthNet Acquisition
Centene Inc. reported the first quarter of 2017 adjusted net income per share of $1.12, beating the Zacks Consensus Estimate by 5.7%. Earnings also improved 51.3% year over year primarily on the back of higher revenues.
Adjusted net earnings from continuing operations soared nearly 100% year over year to $197 million at the end of the first quarter of 2017.
Operational Update
For the first quarter of 2017, Centene’s total revenues increased 69% to $11.7 billion from 2016 primarily driven by the acquisition of Health Net, as well as the impact from expansions and new programs in some of its states in 2016 and 2017. Growth in the Health Insurance Marketplace business in 2017 can also be considered as a major driver behind this.
Health Benefit Ratio (HBR) of 87.6% at the end of the first quarter of 2017 declined from 88.7% in the prior-year quarter primarily due to the acquisition of Health Net, which operates at a lower HBR due to a greater mix of commercial business and growth in the Health Insurance Marketplace business in 2017
The Selling, General and Administrative (SG&A) expense ratio was 9.8% in the first quarter of 2017, improved 150 basis points over 11.3% for the first quarter of 2016.
Excluding the Penn Treaty assessment and Health Net acquisition related expenses, the SG&A expense ratio was 9.3% for the first quarter of 2017, deteriorated 100 basis points from 8.3% in 2016. This deterioration primarily stemmed from the addition of the Health Net business, which operates at a higher SG&A ratio due to a greater mix of commercial and Medicare business.
Financial Update
As of Mar 31, 2017, Centene had cash and cash equivalents of $4.8 billion, up 23% year over year. Total assets of $21.4 billion also grew 6% over the prior year at the end of the first quarter of 2017.
As of Mar 31, 2017, Centene’s long-term debt totaled $4.6 billion, down 0.2%
For the first quarter of 2017, operating cash flow was $1.25 million in the first quarter of 2017, compared to the year-ago figure of $196 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been eight revisions higher for the current quarter compared to one lower. In the past month, the consensus estimate has shifted by 5.5% due to these changes.
At this time, Centene's stock has a strong Growth Score of 'A', though it is lagging a bit on the momentum 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 quintile 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.
Based on our scores, the stock is more suitable for value and growth investors than momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. . Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Centene (CNC) Up 2.7% Since the Last Earnings Report?
It has been about a month since the last earnings report for Centene Corporation (CNC - Free Report) . Shares have added about 2.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Centene’s Q1 Earnings Beat Estimates on HealthNet Acquisition
Centene Inc. reported the first quarter of 2017 adjusted net income per share of $1.12, beating the Zacks Consensus Estimate by 5.7%. Earnings also improved 51.3% year over year primarily on the back of higher revenues.
Adjusted net earnings from continuing operations soared nearly 100% year over year to $197 million at the end of the first quarter of 2017.
Operational Update
For the first quarter of 2017, Centene’s total revenues increased 69% to $11.7 billion from 2016 primarily driven by the acquisition of Health Net, as well as the impact from expansions and new programs in some of its states in 2016 and 2017. Growth in the Health Insurance Marketplace business in 2017 can also be considered as a major driver behind this.
Health Benefit Ratio (HBR) of 87.6% at the end of the first quarter of 2017 declined from 88.7% in the prior-year quarter primarily due to the acquisition of Health Net, which operates at a lower HBR due to a greater mix of commercial business and growth in the Health Insurance Marketplace business in 2017
The Selling, General and Administrative (SG&A) expense ratio was 9.8% in the first quarter of 2017, improved 150 basis points over 11.3% for the first quarter of 2016.
Excluding the Penn Treaty assessment and Health Net acquisition related expenses, the SG&A expense ratio was 9.3% for the first quarter of 2017, deteriorated 100 basis points from 8.3% in 2016. This deterioration primarily stemmed from the addition of the Health Net business, which operates at a higher SG&A ratio due to a greater mix of commercial and Medicare business.
Financial Update
As of Mar 31, 2017, Centene had cash and cash equivalents of $4.8 billion, up 23% year over year. Total assets of $21.4 billion also grew 6% over the prior year at the end of the first quarter of 2017.
As of Mar 31, 2017, Centene’s long-term debt totaled $4.6 billion, down 0.2%
For the first quarter of 2017, operating cash flow was $1.25 million in the first quarter of 2017, compared to the year-ago figure of $196 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been eight revisions higher for the current quarter compared to one lower. In the past month, the consensus estimate has shifted by 5.5% due to these changes.
Centene Corporation Price and Consensus
Centene Corporation Price and Consensus | Centene Corporation Quote
VGM Scores
At this time, Centene's stock has a strong Growth Score of 'A', though it is lagging a bit on the momentum 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 quintile 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.
Based on our scores, the stock is more suitable for value and growth investors than momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. . Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.