How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you'd invested in Centene (CNC) ten years ago? It may not have been easy to hold on to CNC for all that time, but if you did, how much would your investment be worth today?
Centene's Business In-Depth
With that in mind, let's take a look at Centene's main business drivers.
Centene Corporation is a well-diversified healthcare company that primarily provides a set of services to the government sponsored healthcare programs. The company serves the under-insured and uninsured individuals through member-focused services. It is also engaged in providing education and outreach programs to inform and assist members in accessing quality, appropriate healthcare services.
Centene offered healthcare services to around 28 million members across 50 states as of Sep 30, 2023. The acquisition of WellCare Health leveraged the company’s position as the largest Medicaid managed care organization in the country. The company retained its market-leading position nationwide, serving 27.5 million members at the end of 2023.
Through a diversified product portfolio and expanding geographic reach, Centene continues to deliver results by executing on its strategy, growing premium and service revenues profitably. This is evidenced by organic growth within its existing operations, new Medicaid contracts, new contract awards in innovative healthcare services, key acquisitions to enhance its medical management platform and participation in Health Insurance Marketplaces. Centene acquired Health Net on Mar 24, 2016 which became its wholly owned subsidiary.
Centene offers affordable and high-quality products to nearly 1 in 15 individuals across the nation. Founded as a single health plan in Wisconsin in 1984, Centene has established itself as a national leader in healthcare services.
Following certain divestments and strategic initiatives, the company changed its segments to Medicaid, Medicare, Commercial and Other. The Commercial segment incorporates the Health Insurance Marketplace and other commercial healthcare products. The Other segment comprises the pharmacy business, vision and dental services, clinical healthcare, behavioral health, international operations and other operations.
Bottom Line
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Centene, if you bought shares a decade ago, you're likely feeling really good about your investment today.
A $1000 investment made in August 2014 would be worth $4,329.54, or a gain of 332.95%, as of August 2, 2024, according to our calculations. This return excludes dividends but includes price appreciation.
In comparison, the S&P 500 gained 182.92% and the price of gold went up 81.52% over the same time frame.
Analysts are anticipating more upside for CNC.
Centene missed second-quarter earnings estimates by a whisker. Its top line has been witnessing consistent growth. It boasts an impressive inorganic growth strategy for expanding to new markets. Contract wins are increasing its medical membership base. Centene does not shy away from selling non-core assets to focus on growing its more profitable Managed Care business. Its 2024 earnings outlook, which is greater than $6.80 per share, indicates year-over-year growth. The company’s shares outperformed the industry in the past year. However, rising operating expenses are a concern. Its high debt level reflects inadequate financial flexibility. Its times interest earned is 6.3X, lower than its industry’s average of 7X. CNC's weak return on invested capital undermines its growth potential. Hence, the stock warrants a cautious stance.
Shares have gained 16.70% over the past four weeks and there have been 2 higher earnings estimate revisions for fiscal 2024 compared to none lower. The consensus estimate has moved up as well.Research Chief Names "Single Best Pick to Double"
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This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
