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Is Centene (CNC) a Great Value Stock Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Centene (CNC). CNC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 13.95, while its industry has an average P/E of 15.59. Over the last 12 months, CNC's Forward P/E has been as high as 20.91 and as low as 13.66, with a median of 16.64.

We also note that CNC holds a PEG ratio of 0.93. 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 1.14. CNC's PEG has been as high as 1.50 and as low as 0.93, with a median of 1.12, all within the past year.

Another notable valuation metric for CNC is its P/B ratio of 2.21. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. CNC's current P/B looks attractive when compared to its industry's average P/B of 3.46. Within the past 52 weeks, CNC's P/B has been as high as 2.96 and as low as 2.21, with a median of 2.65.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CNC has a P/S ratio of 0.4. This compares to its industry's average P/S of 0.42.

These are only a few of the key metrics included in Centene's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, CNC looks like an impressive value stock at the moment.

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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