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Centene Corp
CNC : NYSE : Health Care
$57.00 | %
Today's Range: 56.31 - 60.23
Avg. Daily Volume: 1,862,700
02/05/16 - 4:01 PM ET

Financial Analysis


CENTENE CORP's gross profit margin for the third quarter of its fiscal year 2015 has increased when compared to the same period a year ago. The company managed to grow both sales and net income at a faster pace than the average competitor in its industry this quarter as compared to the same quarter a year ago. CENTENE CORP has weak liquidity. Currently, the Quick Ratio is 0.87 which shows a lack of ability to cover short-term cash needs. The liquidity decreased from the same period a year ago, despite already having weak liquidity to begin with. This would indicate deteriorating cash flow.

At the same time, stockholders' equity ("net worth") has greatly increased by 25.60% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

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Income Statement Q3 FY15 Q3 FY14
Net Sales ($mil)5821.04351.86
EBITDA ($mil)231.0130.84
EBIT ($mil)202.0107.93
Net Income ($mil)93.082.62


Balance Sheet Q3 FY15 Q3 FY14
Cash & Equiv. ($mil)1827.01690.59
Total Assets ($mil)7322.05446.35
Total Debt ($mil)1281.0954.85
Equity ($mil)2051.01632.9


Profitability Q3 FY15 Q3 FY14
Gross Profit Margin11.6110.68
EBITDA Margin3.963.0
Operating Margin3.472.48
Sales Turnover2.892.71
Return on Assets4.783.99
Return on Equity17.0612.86
Debt Q3 FY15 Q3 FY14
Current Ratio1.011.05
Debt/Capital0.380.37
Interest Expense11.09.28
Interest Coverage18.3611.63


Share Data Q3 FY15 Q3 FY14
Shares outstanding (mil)119.2117.33
Div / share0.00.0
EPS0.750.67
Book value / share17.2113.92
Institutional Own % n/a n/a
Avg Daily Volume1850545.01772316.0

Valuation


BUY. CENTENE CORP's P/E ratio indicates a discount compared to an average of 21.35 for the Health Care Providers & Services industry and a value on par with the S&P 500 average of 21.13. For additional comparison, its price-to-book ratio of 3.51 indicates a premium versus the S&P 500 average of 2.51 and a premium versus the industry average of 3.13. The current price-to-sales ratio is well below the S&P 500 average and is also below the industry average, indicating a discount. The valuation analysis reveals that, CENTENE CORP seems to be trading at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
CNC 21.09 Peers 21.35   CNC 8.76 Peers 11.69

Average. An average P/E ratio can signify an industry neutral price for a stock and an average growth expectation.

CNC is trading at a valuation on par with its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

CNC is trading at a significant discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
CNC 15.47 Peers 15.87   CNC NM Peers 1.06

Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations.

CNC is trading at a significant premium to its peers.

 

Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

CNC's negative PEG ratio makes this valuation measure meaningless.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
CNC 3.51 Peers 3.13   CNC 61.58 Peers 94.42

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

CNC is trading at a premium to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, CNC is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
CNC 0.34 Peers 0.73   CNC 43.44 Peers 14.88

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

CNC is trading at a significant discount to its industry on this measurement.

 

Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.

CNC has a sales growth rate that significantly exceeds its peers.

 

 

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