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Centene Corporation (CNC) Falls Further As It's Water-Logged And Getting Wetter

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Centene Corporation ( CNC) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Centene Corporation as such a stock due to the following factors:

  • CNC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $36.5 million.
  • CNC has traded 183,108 shares today.
  • CNC traded in a range 225.4% of the normal price range with a price range of $3.08.
  • CNC traded below its daily resistance level (quality: 42 days, meaning that the stock is crossing a resistance level set by the last 42 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on CNC:

Centene Corporation provides multi-line healthcare programs and services in the United States. It operates in two segments, Medicaid Managed Care and Specialty Services. CNC has a PE ratio of 27.9. Currently there are 8 analysts that rate Centene Corporation a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Centene Corporation has been 547,300 shares per day over the past 30 days. Centene has a market cap of $3.4 billion and is part of the health care sector and health services industry. The stock has a beta of 1.14 and a short float of 6.1% with 4.90 days to cover. Shares are up 0.3% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Centene Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • CNC's revenue growth has slightly outpaced the industry average of 11.4%. Since the same quarter one year prior, revenues rose by 14.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 1192.8% when compared to the same quarter one year prior, rising from $3.82 million to $49.37 million.
  • The current debt-to-equity ratio, 0.44, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.88 is somewhat weak and could be cause for future problems.
  • Powered by its strong earnings growth of 1142.85% and other important driving factors, this stock has surged by 39.31% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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