Centene Corporation (NYSE:CNC): Immense Growth Potential?

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

Centene Corporation’s (NYSE:CNC) most recent earnings announcement in December 2018 revealed that the company experienced a small tailwind, eventuating to a single-digit earnings growth of 8.7%. Below, I’ve presented key growth figures on how market analysts predict Centene’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

View our latest analysis for Centene

Market analysts’ consensus outlook for next year seems optimistic, with earnings expanding by a significant 76%. This strong growth in earnings is expected to continue, bringing the bottom line up to US$2.1b by 2022.

NYSE:CNC Future Profit February 11th 19
NYSE:CNC Future Profit February 11th 19

Although it’s helpful to understand the growth year by year relative to today’s figure, it may be more valuable gauging the rate at which the earnings are rising or falling every year, on average. The pro of this technique is that we can get a bigger picture of the direction of Centene’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 22%. This means that, we can expect Centene will grow its earnings by 22% every year for the next couple of years.

Next Steps:

For Centene, I’ve put together three essential aspects you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is CNC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether CNC is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CNC? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.