Are Investors Undervaluing Centene (CNC) Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Centene (CNC) is a stock many investors are watching right now. CNC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 12.83, which compares to its industry's average of 17.58. Over the past 52 weeks, CNC's Forward P/E has been as high as 14.43 and as low as 8.87, with a median of 11.69.

Investors should also note that CNC holds a PEG ratio of 0.88. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CNC's PEG compares to its industry's average PEG of 1.32. Over the last 12 months, CNC's PEG has been as high as 1 and as low as 0.62, with a median of 0.84.

Investors should also recognize that CNC has a P/B ratio of 3.01. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.75. Over the past year, CNC's P/B has been as high as 3.38 and as low as 1.43, with a median of 1.91.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CNC has a P/S ratio of 0.46. This compares to its industry's average P/S of 0.58.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Centene is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CNC feels like a great value stock at the moment.

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