Back to top

Should Value Investors Buy Centene (CNC) Stock?

Read MoreHide Full Article

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Centene (CNC - Free Report) . CNC is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 15.10 right now. For comparison, its industry sports an average P/E of 15.39. CNC's Forward P/E has been as high as 18.66 and as low as 13.08, with a median of 15.93, all within the past year.

Investors should also note that CNC holds a PEG ratio of 1.13. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CNC's industry has an average PEG of 1.15 right now. Over the last 12 months, CNC's PEG has been as high as 1.27 and as low as 0.87, with a median of 1.08.

We should also highlight that CNC has a P/B ratio of 2.42. 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. This stock's P/B looks attractive against its industry's average P/B of 3.30. Over the past year, CNC's P/B has been as high as 2.96 and as low as 2.05, with a median of 2.60.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CNC has a P/S ratio of 0.4. This compares to its industry's average P/S of 0.47.

These are just a handful of the figures considered in Centene's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that CNC is an impressive value stock right now.




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Centene Corporation (CNC) - free report >>

More from Zacks Tale of the Tape

You May Like

Published in