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Is Centene (CNC) Stock Undervalued Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now 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 is trading with P/E ratio of 11.30 right now. For comparison, its industry sports an average P/E of 17.28. Over the past year, CNC's Forward P/E has been as high as 14.43 and as low as 8.87, with a median of 11.95.

CNC is also sporting a PEG ratio of 0.77. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CNC's industry has an average PEG of 1.30 right now. CNC's PEG has been as high as 1 and as low as 0.62, with a median of 0.84, all within the past year.

We should also highlight that CNC has a P/B ratio of 1.46. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. CNC's current P/B looks attractive when compared to its industry's average P/B of 3.75. Within the past 52 weeks, CNC's P/B has been as high as 2.23 and as low as 1.34, with a median of 1.73.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. 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 0.44. This compares to its industry's average P/S of 0.59.

Value investors will likely look at more than just these metrics, but the above data helps show that Centene is likely undervalued currently. And when considering the strength of its earnings outlook, CNC sticks out at as one of the market's strongest value stocks.


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