While Centene Corporation (NYSE:CNC) shareholders are probably generally happy, the stock hasn’t had particularly good run recently, with the share price falling 21% in the last quarter. But that doesn’t change the fact that the returns over the last five years have been very strong. It’s fair to say most would be happy with 212% the gain in that time. We think it’s more important to dwell on the long term returns than the short term returns. The more important question is whether the stock is too cheap or too expensive today.
To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).
During five years of share price growth, Centene achieved compound earnings per share (EPS) growth of 25% per year. That makes the EPS growth particularly close to the yearly share price growth of 26%. This indicates that investor sentiment towards the company has not changed a great deal. In fact, the share price seems to largely reflect the EPS growth.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
Dive deeper into Centene’s key metrics by checking this interactive graph of Centene’s earnings, revenue and cash flow.
A Different Perspective
Investors in Centene had a tough year, with a total loss of 11%, against a market gain of about 8.2%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn’t be so upset, since they would have made 26%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Before spending more time on Centene it might be wise to click here to see if insiders have been buying or selling shares.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.