Time To Buy Centene Stock?

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Centene (NYSE:CNC) recently reported a surprise loss of $0.16 per share for Q2, significantly missing analyst expectations of $0.23 per share. This downturn is primarily attributed to a continued increase in medical costs for government-backed insurance plans, evidenced by a 540 basis point year-over-year surge in its health benefit ratio to 93% in Q2.

Despite these disappointing results, CNC stock rose 6% on Friday, July 25. This positive market reaction followed management’s optimistic forecast for a much-improved performance in 2026.

Even with Friday’s gain, CNC stock remains down over 50% year-to-date, largely due to ongoing concerns about rising medical costs. While Centene certainly appears to be a risky investment given its recent performance, we believe it presents a compelling buying opportunity at its current price of around $28, primarily due to its very low valuation.

Our conclusion is based on a comprehensive analysis comparing CNC’s current valuation with its operational performance in recent years and its historical and current financial health. Our assessment of Centene across key parameters—Growth, Profitability, Financial Stability, and Downturn Resilience—indicates a moderate overall operating performance and financial condition.

However, for investors who seek lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

How Does Centene’s Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, CNC stock looks cheap compared to the broader market.

• Centene has a price-to-sales (P/S) ratio of 0.1 vs. a figure of 3.1 for the S&P 500
• Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 9.4 compared to 20.4 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 5.4 vs. the benchmark’s 22.8

How Have Centene’s Revenues Grown Over Recent Years?

Centene’s Revenues have seen notable growth over recent years.

• Centene has seen its top line grow at an average rate of 8.3% over the last 3 years (vs. increase of 5.3% for S&P 500)
• Also, its quarterly revenues grew 22.3% to $48.7 Bil in the most recent quarter from $40 Bil a year ago (vs. 4.5% improvement for S&P 500)

How Profitable Is Centene?

Centene’s profit margins are considerably worse than most companies in the Trefis coverage universe.

Does Centene Look Financially Stable?

Centene’s balance sheet looks weak.

• Centene’s Debt figure was $18 Bil at the end of the most recent quarter, while its market capitalization is $14 Bil (as of 7/27/2025). This implies a very poor Debt-to-Equity Ratio of 130.0% (vs. 22.6% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $17 Bil of the $86 Bil in Total Assets for Centene. This yields a strong Cash-to-Assets Ratio of 19.8% (vs. 6.7% for S&P 500)

How Resilient Is CNC Stock During A Downturn?

CNC stock has seen an impact that was slightly better than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on CNC stock? Our dashboard – CNC Fell 50% In A Month. Past Crashes Went Deeper – has a detailed analysis of how the stock performed during and after previous market crashes.

Inflation Shock (2022)

• CNC stock fell 37.0% from a high of $97.22 on 15 August 2022 to $61.27 on 1 September 2023, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is 80.41 on 27 February 2024 and currently trades at around $28

Covid Pandemic (2020)

• CNC stock fell 33.0% from a high of $68.02 on 23 January 2020 to $45.55 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 15 April 2020

Global Financial Crisis (2008)

• CNC stock fell 53.2% from a high of $7.10 on 8 January 2008 to $3.33 on 14 April 2008, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 14 January 2011

Putting All The Pieces Together: What It Means For CNC Stock

In summary, Centene’s performance across the parameters detailed above are as follows:

• Growth: Very Strong
• Profitability: Extremely Weak
• Financial Stability: Weak
• Downturn Resilience: Neutral
• Overall: Neutral

While Centene has demonstrated a moderate performance across our key analytical parameters, its current valuation of 0.1x revenues is particularly attractive.

We could be wrong in our assessment and investors might continue to assign a low valuation multiple to Centene due to ongoing concerns about rising medical costs. However, for investors with a 3-5 year investment horizon, we believe CNC stock offers a compelling entry point. Furthermore, the average analyst price target of $44 suggests a significant upside of over 55% from its current levels.

While CNC stock looks promising, investing in a single stock can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.