August 24, 2023
Top 10 Stock Centene Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Centene – Top 10 Stock in Dow Jones U.S. Health Care Providers Index
Centene is listed as a top 10 stock on August 24, 2023 in the market index D.J. US Health Care because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low, despite a currently slow growth momentum. Based on the Obermatt 360° View of 50 (high 50% performer), Obermatt assesses an overall buy recommendation for Centene on August 24, 2023.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Health Care Managed |
| Index | Employee Focus US, Diversity USA, D.J. US Health Care, S&P 500 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Centene Buy
| 360 METRICS | August 24, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 88 |
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| GROWTH | ||||||||
| GROWTH | 1 |
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| SAFETY | ||||||||
| SAFETY | 55 |
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| SENTIMENT | ||||||||
| SENTIMENT | 65 |
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| 360° VIEW | ||||||||
| 360° VIEW | 50 |
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ANALYSIS: With an Obermatt 360° View of 50 (better than 50% compared with alternatives), overall professional sentiment and financial characteristics for the stock Centene are above average. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for Centene. The consolidated Value Rank has an attractive rank of 88, which means that the share price of Centene is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 88% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 55. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 65. But the consolidated Growth Rank has a low rank of 1, which means that the company is below average in terms of growth and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 99 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 50, Centene is better positioned than 50% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 88), secure financing practices (Safety Rank of 55), and positive market sentiment in the professional investor community (Sentiment Rank of 65). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company’s growth expectations are below the industry average (Growth Rank of 1), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good Value Rank could indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of Centene is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Centene positive
ANALYSIS: With an Obermatt Sentiment Rank of 65 (better than 65% compared with alternatives), overall professional sentiment and engagement for the stock Centene is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Centene. Analyst Opinions are at a rank of 34 (worse than 66% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 82, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Centene. Even better, the Professional Investors rank is 58, meaning that professional investors hold more stock in this company than in 58% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 68, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 68% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 65 (more positive than 65% compared with investment alternatives), Centene has a reputation among professional investors that is above-average compared with that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: Centene Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 88 (better than 88% compared with alternatives) for 2023, Centene shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Centene. Price-to-Sales (P/S) is 85, which means that the stock price compared with what market professionals expect for future sales is lower than for 85% of comparable companies, indicating a good value regarding Centene's revenue size. The same is valid for expected Price to Profits (or Price / Earnings, P/E), more favorable than for 94% of alternatives, and it's also true for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 84. But, compared with other companies in the same industry, dividend yields are expected to be lower than average; only 1% of all competitors have even lower dividend yields than Centene (a Dividend Yield Rank of 1). 99% alternative investments in the same business provide a higher dividend yield. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 88, is a buy recommendation based on Centene's stock price compared with the company's operational size and dividend yields. The below-average dividend yield may be a good sign, as it could mean the company has more attractive investment opportunities for the generated cash than to pay it out as dividends. A low dividend yield can also indicate a growth phase. ...read more
Growth Strategy: Centene Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 1 (better than 1% compared with alternatives), Centene shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with all four metrics below average for Centene. Sales Growth has a rank of 4, which means that currently professionals expect the company to grow less than 96% of its competitors. The same is valid for Profit Growth, with a rank of 46, and Capital Growth with 12. In addition, Stock Returns have a below market rank of 19, which means that the stock returns have recently been below 81% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 1, is a sell recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's outlook, especially Sentiment performance, because it may be a turnaround situation that could entail above-average stock returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more
Safety Strategy: Centene Debt Financing Safety above-average
| SAFETY METRICS | August 24, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 32 |
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| REFINANCING | ||||||||
| REFINANCING | 68 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 51 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 55 |
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ANALYSIS: With an Obermatt Safety Rank of 55 (better than 55% compared with alternatives), the company Centene has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Centene is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for Centene. Refinancing is at 68, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 68% of its competitors. Liquidity is also good at 51, meaning the company generates more profit to service its debt than 51% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 32, which means the company has an above-average debt-to-equity ratio. It has more debt than 68% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 55 (better than 55% compared with alternatives), Centene has a financing structure that is safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Centene could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Centene Below-Average Financial Performance
| COMBINED PERFORMANCE | August 24, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 88 |
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| GROWTH | ||||||||
| GROWTH | 1 |
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| SAFETY | ||||||||
| SAFETY | 51 |
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| COMBINED | ||||||||
| COMBINED | 40 |
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ANALYSIS: With an Obermatt Combined Rank of 40 (worse than 60% compared with investment alternatives), Centene (Health Care Managed, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Centene are a good value (attractively priced) with a consolidated Value Rank of 88 (better than 88% of alternatives), are safely financed (Safety Rank of 55, which means low debt burdens), but show below-average growth (Growth Rank of 1). ...read more
RECOMMENDATION: A Combined Rank of 40, is a hold recommendation based on Centene's financial characteristics. As the company Centene's key financial metrics exhibit good value (Obermatt Value Rank of 88) but low growth (Obermatt Growth Rank of 1) while being safely financed (Obermatt Safety Rank of 55), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 88% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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