Back to top

Is Centene (CNC) Stock Undervalued Right Now?

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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 stock to keep an eye on is Centene (CNC - Free Report) . CNC is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 11.71, while its industry has an average P/E of 14.63. Over the past 52 weeks, CNC's Forward P/E has been as high as 18.66 and as low as 10.67, with a median of 15.93.

CNC is also sporting a PEG ratio of 0.87. 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 PEG compares to its industry's average PEG of 1.09. Over the last 12 months, CNC's PEG has been as high as 1.27 and as low as 0.80, with a median of 1.08.

We should also highlight that CNC has a P/B ratio of 1.92. The P/B ratio pits a stock's market value against 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 3.29. Within the past 52 weeks, CNC's P/B has been as high as 2.96 and as low as 1.67, with a median of 2.47.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CNC has a P/S ratio of 0.34. This compares to its industry's average P/S of 0.52.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Centene is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CNC feels like a great value stock at the moment.


In-Depth Zacks Research for the Tickers Above


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


Centene Corporation (CNC) - free report >>

Published in