Centene management focuses on the pipeline of opportunity as well as addressing any gaps in capabilities, BMO Capital noted.
"We believe significant expansion and diversification have reduced the risk related to new starts and state-specific dynamics that can lean on the medical loss ratio (MLR) from time to time," BMO Capital analysts said.
The team's approach to capital management remains unchanged, with a comfortable debt to capitalization in the mid-to high 30s and a willingness to issue equity for deals when feasible, BMO Capital added.
Centene is a healthcare company that offers government-sponsored healthcare programs by assisting in accessing care, coordinating referrals to related health and social services, providing education and outreach programs.
Separately, TheStreet Ratings team rates CENTENE CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CENTENE CORP (CNC) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and solid stock price performance. We feel its strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 13.1%. Since the same quarter one year prior, revenues rose by 48.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CENTENE CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CENTENE CORP increased its bottom line by earning $2.22 versus $1.43 in the prior year. This year, the market expects an improvement in earnings ($2.70 versus $2.22).
- 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 91.0% when compared to the same quarter one year prior, rising from $32.98 million to $63.00 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Providers & Services industry and the overall market, CENTENE CORP's return on equity exceeds that of both the industry average and the S&P 500.
- Powered by its strong earnings growth of 82.45% and other important driving factors, this stock has surged by 104.09% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: CNC Ratings Report