Taking on analysts’ expectations and winning: Centene Corporation (CNC)

Centene Corporation (NYSE: CNC) stock jumped 0.18% on Friday to $92.97 against a previous-day closing price of $92.80. With 2.56 million shares changed hands, the volume of the stock remained lighter than its average volume of 2.92 million shares. During the session, the Healthcare Plans company that operates in wider Healthcare sector, reached to the highest price of $93.41 whereas the lowest price it dropped to was $92.12. The 52-week range on CNC shows that it touched its highest point at $94.58 and its lowest point at $59.67 during that stretch. It currently has a 1-year price target of $103.55. Beta for the stock currently stands at 0.50.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of CNC was up-trending over the past week, with a rise of 0.67%, but this was up by 8.09% over a month. Three-month performance surged to 12.13% while six-month performance rose 17.95%. The stock gained 34.56% in the past year, while it has gained 12.83% so far this year. A look at the trailing 12-month EPS for CNC yields 3.14 with Next year EPS estimates of 6.31. For the next quarter, that number is 1.24. This implies an EPS growth rate of -26.90% for this year and 11.66% for next year. EPS is expected to grow by 12.32% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 6.00%.

Float and Shares Shorts:

At present, 583.64 million CNC shares are outstanding with a float of 574.60 million shares on hand for trading. On Jul 14, 2022, short shares totaled 7.35 million, which was 1.27% higher than short shares on Jun 14, 2022. In addition to Ms. Sarah M. London as the firm’s Chief Exec. Officer & Director, Mr. Brent Davis Layton serves as its Pres & COO.

Institutional Ownership:

Through their ownership of 97.05% of CNC’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 61.86% of CNC, in contrast to 34.70% held by mutual funds. Shares owned by individuals account for 2.90%. As the largest shareholder in CNC with 10.48% of the stake, The Vanguard Group, Inc. holds 61,289,138 shares worth 61,289,138. A second-largest stockholder of CNC, Capital Research & Management Co, holds 50,535,746 shares, controlling over 8.64% of the firm’s shares. T. Rowe Price Associates, Inc. is the third largest shareholder in CNC, holding 30,386,096 shares or 5.20% stake. With a 3.95% stake in CNC, the American Funds Fundamental Invest is the largest stakeholder. A total of 23,113,319 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 2.95% of CNC stock, is the second-largest Mutual Fund holder. It holds 17,251,995 shares valued at 1.46 billion. Vanguard Mid Cap Index Fund holds 2.30% of the stake in CNC, owning 13,465,976 shares worth 1.14 billion.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Jun 29, 2022, CNC reported revenue of $35.94B and operating income of $1.32B. Over the past year, revenue came in at $138.09B while operating income stood at $2.27B. It generated -$172.00M net income for the quarter, which came to $1.86B over the last twelve months. The EBITDA in the recently reported quarter was $1.72B and diluted EPS was -$0.29. EBITDA for the full year was $5.50B.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for CNC since 22 analysts follow the stock currently. There are 15 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 4 believe that the stock is worth HOLDING, 3 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With CNC analysts setting a high price target of $116.00 and a low target of $88.00, the average target price over the next 12 months is $103.95. Based on these targets, CNC could surge 24.77% to reach the target high and fall by -5.35% to reach the target low. Reaching the average price target will result in a growth of 11.81% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. CNC will report FY 2022 earnings on 02/07/2023. Analysts have provided yearly estimates in a range of $5.75 being high and $5.36 being low. For CNC, this leads to a yearly average estimate of $5.68. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Centene Corporation surprised analysts by $0.17 when it reported $1.77 EPS against a consensus estimate of $1.60. The surprise factor in the prior quarter was $0.15. Based on analyst estimates, the high estimate for the next quarter is $1.44 and the low estimate is $1.12. The average estimate for the next quarter is thus $1.26.

Summary of Insider Activity:

Insiders traded CNC stock several times over the past three months with 7 Buys and 9 Sells. In these transactions, 2,903 shares were bought while 33,856 shares were sold. The number of buy transactions has increased to 71 while that of sell transactions has risen to 76 over the past year. The total number of shares bought during that period was 976,673 while 964,072 shares were sold.

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