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Is Centene (CNC) Stock Undervalued Right Now?

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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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Centene (CNC - Free Report) . CNC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 10.44. This compares to its industry's average Forward P/E of 14.75. Over the past 52 weeks, CNC's Forward P/E has been as high as 18.66 and as low as 10.26, with a median of 14.35.

Investors should also note that CNC holds a PEG ratio of 0.74. 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 currently sports an average PEG of 1.11. CNC's PEG has been as high as 1.27 and as low as 0.72, with a median of 1, all within the past year.

Another notable valuation metric for CNC is its P/B ratio of 1.67. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 3.22. Within the past 52 weeks, CNC's P/B has been as high as 2.82 and as low as 1.64, with a median of 2.27.

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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CNC has a P/S ratio of 0.29. This compares to its industry's average P/S of 0.48.

Finally, investors will want to recognize that CNC has a P/CF ratio of 11.10. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 13.16. CNC's P/CF has been as high as 23.13 and as low as 10.89, with a median of 18.34, all within the past year.

These are only a few of the key metrics included in Centene's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, CNC looks like an impressive value stock at the moment.


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