Centene Corp (CNC, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $76.32, Centene Corp has witnessed a daily gain of 1.56%, marked against a three-month change of 1.24%. A thorough analysis, underlined by the GF Score, suggests that Centene Corp is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 7/10
- Profitability rank: 8/10
- Growth rank: 9/10
- GF Value rank: 9/10
- Momentum rank: 10/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a particularly high Growth rank and Momentum rank, and slightly lower but still strong Financial Strength rank, GuruFocus assigned Centene Corp the GF Score of 93 out of 100, which signals the highest outperformance potential.
Understanding Centene Corp's Business
Centene Corp, with a market cap of $40.82 billion and sales of $153.99 billion, operates as a managed-care organization primarily focused on government-sponsored healthcare plans, including Medicaid, Medicare, and the individual exchanges. As of June 2023, Centene Corp served 24 million medical members, with a significant portion in Medicaid (67% of membership), followed by the individual exchanges (14%), and Medicare Advantage (6%) plans. The company also caters to traditional Medicare users with its Medicare Part D pharmaceutical program. With an operating margin of 2.25%, Centene Corp's business model emphasizes efficient management and growth within the healthcare sector.
Financial Strength Breakdown
According to the Financial Strength rating, Centene Corp's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. With a favorable Debt-to-Revenue ratio of 0.12, Centene Corp's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Centene Corp's impressive standing among its peers in generating profit. The Piotroski F-Score confirms Centene Corp's solid financial situation based on Joseph Piotroski's nine-point scale, which measures a company's profitability, funding and operating efficiency. Centene Corp's strong Predictability Rank of 3.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Centene Corp demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 13.7%, which outperforms 57.89% of companies in the Healthcare Plans industry. Moreover, Centene Corp has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 7.8, and the rate over the past five years is 8.8. This trend accentuates the company's continued capability to drive growth.
Next Steps
Considering Centene Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors seeking to capitalize on this momentum can explore further by becoming GuruFocus Premium members, where they can access a wealth of information and tools to aid in their investment decisions. For those interested in finding more companies with strong GF Scores, the following screener link is a valuable resource: GF Score Screen.
As Centene Corp continues to navigate the complexities of the healthcare industry, its strategic initiatives and financial acumen position it as a compelling choice for value investors. Will Centene Corp maintain its trajectory and continue to outperform the market? Only time will tell, but the indicators are certainly promising.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
