Centene (CNC) AI Stock Analysis

• Market Cap: $28.85B
• Dividend Yield: N/A
• Average Volume (3M): 4.82M
• Price to Earnings (P/E): 9.4
• Beta (1Y): 0.24
• Revenue Growth: 5.89%
• EPS Growth: 27.09%
• Country: US
• Employees: 67,700
• Sector: Healthcare
• Sector Strength: 74
• Industry: Medical Service Plans
• EPS (TTM): 6.25
• Shares Outstanding: 496,044,000
• 10 Day Avg. Volume: 5,308,051
• 30 Day Avg. Volume: 4,816,874
• PEG Ratio: 0.35
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.19
• Price to Cash Flow (P/CF): -12.30
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $77.04
• Price Target Upside: 33.13% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

Centene's strong revenue growth and profitability, coupled with stable financial health, underpin a positive outlook. However, technical indicators suggest a bearish trend, and cash flow challenges need resolution. Valuation metrics indicate the stock is undervalued, presenting an opportunity for investors. Positive guidance from the earnings call and strategic board appointment bolster confidence, but Medicaid membership and operational cash flow remain concerns.

Positive Factors

Enrollment Growth

Marketplace membership increased 12.4% year over year, indicating growth in the commercial segment.

Revenue Guidance

CNC raised its 2025 revenue guidance by $4 billion, including additional revenue from PDP and Medicaid services.

Negative Factors

HIX Market Complexity

There is limited attention to the complexity of the HIX market and risk pool.

Medicaid Membership

Medicaid membership decreased by 10.1% year over year, which could be a concern for future growth in this segment.

Medicare Membership

Medicare membership decreased 13.5% year over year, which could impact revenue and market position in this area.

Centene Business Overview & Revenue Model

Company Description

Centene Corporation is a leading multinational healthcare enterprise that provides a wide range of services to government-sponsored and commercial healthcare programs, focusing primarily on under-insured and uninsured individuals. Operating through its subsidiaries, Centene offers a variety of health insurance products and services, including Medicaid, Medicare Advantage, and Marketplace insurance plans. The company also provides services such as behavioral health, long-term care, pharmacy benefits management, and managed care solutions to its members.

How the Company Makes Money

Centene Corporation generates revenue primarily through the premiums it receives from providing health insurance plans to its members. These premiums are paid by government programs like Medicaid and Medicare, as well as individuals purchasing plans on the Health Insurance Marketplace. The company also earns money through contracts for managing healthcare services, which involve coordinating care, managing costs, and ensuring quality for its members. Additionally, Centene benefits from partnerships with various healthcare providers and networks that help streamline services and reduce costs. The company's diversified portfolio of health solutions and its strategic acquisitions have been significant factors in its financial growth and earnings.

Centene Financial Statement Overview

Summary

Centene exhibits strong revenue growth and profitability on the income statement, with a stable financial position on the balance sheet. However, there are concerns regarding cash flow generation, which the company must address to ensure sustained financial health. Overall, Centene is on a positive growth trajectory but should focus on improving cash flow efficiency.

Income Statement

Centene's income statement demonstrates strong revenue growth with a 5.89% increase from 2023 to 2024. The company maintains a healthy gross profit margin of 21.24% and a net profit margin of 2.03% for 2024, reflecting solid profitability. While the EBIT margin improved slightly to 1.95%, the EBITDA margin decreased significantly, indicating potential cost pressures. Overall, Centene shows a positive trajectory in revenue and profit growth.

Balance Sheet

The balance sheet reveals a stable financial position with a debt-to-equity ratio of 0.70, indicating prudent leverage management. The return on equity (ROE) is strong at 12.52%, showcasing efficient use of equity to generate profits. The equity ratio stands at 32.03%, highlighting a solid portion of assets financed by equity. While the balance sheet demonstrates stability, the company should monitor debt levels to maintain financial flexibility.

Cash Flow

Centene's cash flow statement indicates a concerning decline in free cash flow, with a negative growth rate from the previous year. The operating cash flow to net income ratio is low, suggesting challenges in converting income to cash. However, the company had a robust free cash flow to net income ratio in 2023, reflecting past efficiency in cash generation. Centene needs to address cash flow generation to support ongoing operations and investments.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
163.07B	154.00B	144.55B	125.98B	111.11B
	Gross Profit
34.63B	31.54B	16.66B	14.20B	15.22B
	EBIT
3.17B	2.93B	3.64B	3.26B	3.08B
	EBITDA
6.20B	5.62B	4.06B	3.95B	4.76B
	Net Income Common Stockholders
3.31B	2.70B	1.20B	1.35B	1.81B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
16.68B	19.65B	14.39B	14.66B	12.38B
	Total Assets
82.44B	84.64B	76.87B	78.38B	68.72B
	Total Debt
19.43B	18.88B	18.02B	18.84B	16.78B
	Net Debt
5.37B	1.68B	5.95B	5.72B	5.98B
	Total Liabilities
55.94B	58.69B	52.63B	51.35B	42.76B
	Stockholders Equity
26.41B	25.84B	24.06B	26.80B	25.77B
Cash Flow		Free Cash Flow
-490.00M	7.25B	5.26B	3.29B	4.63B
	Operating Cash Flow
154.00M	8.05B	6.26B	4.21B	5.50B
	Investing Cash Flow
-1.05B	-1.19B	-2.92B	-3.30B	-6.96B
	Financing Cash Flow
-2.41B	-1.66B	-4.20B	1.36B	260.00M

Centene Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 57.87
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CNC, the sentiment is Negative. The current price of 57.87 is below the 20-day moving average (MA) of 58.29, below the 50-day MA of 60.81, and below the 200-day MA of 66.94, indicating a bearish trend. The MACD of -0.84 indicates Negative momentum. The RSI at 45.02 is Neutral, neither overbought nor oversold. The STOCH value of 40.02 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CNC.

Centene Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CVS	76 Outperform	$82.86B	17.98	6.11%	4.10%	4.02%	-43.51%
CNC	75 Outperform	$28.85B	9.38	12.51%	―	5.89%	27.09%
MOH	72 Outperform	$16.71B	14.83	26.22%	―	19.24%	8.57%
CI	69 Neutral	$84.53B	25.47	0.84%	1.80%	25.19%	―
HUM	67 Neutral	$32.62B	27.08	7.37%	1.31%	10.70%	-49.85%
UNH	65 Neutral	$434.13B	30.61	14.66%	1.75%	8.35%	-35.14%
Sector *	49 Neutral	$7.05B	0.34	-55.09%	2.46%	25.27%	-3.43%

Centene Corporate Events

Centene Reaffirms 2025 EPS Guidance to Investors

On March 4, 2025, Centene Corporation’s senior management will meet with investors to reaffirm their 2025 full-year adjusted diluted EPS guidance of over $7.25, as previously stated in February. The company emphasizes the use of non-GAAP financial measures to provide a clearer view of its core performance, although these measures may differ from those used by other companies. This approach aims to help investors better understand Centene’s ongoing operations and performance, despite the challenges in reconciling these figures with GAAP standards.

Centene Expands Board with Kenneth Tanji Appointment

Centene Corporation announced the appointment of Kenneth Y. Tanji to its Board of Directors, effective February 20, 2025, expanding the board to 12 members. Tanji, who brings over three decades of financial expertise, previously served as Executive Vice President and CFO of Prudential Financial, Inc. His appointment is expected to enhance Centene’s strategic direction in healthcare, leveraging his experience in capital optimization and advanced analytics to address complex industry challenges.

Centene Projects Strong Financial Growth for 2025

Centene Corporation announced its financial guidance for 2025, projecting an adjusted diluted EPS of over $7.25, marking a growth of more than 6% year-over-year. The company reaffirmed its 2024 financial targets and detailed its revenue expectations, health benefits ratio, and administrative expense projections for 2025, highlighting its commitment to improving core operations and customer experiences while maintaining financial commitments.