Intrinsic value of Centene Corporation - CNC

Previous Close

$50.23

  Intrinsic Value

$274.68

stock screener

  Rating & Target

str. buy

+447%

Previous close

$50.23

 
Intrinsic value

$274.68

 
Up/down potential

+447%

 
Rating

str. buy

We calculate the intrinsic value of CNC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 20.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  29.30
  26.87
  24.68
  22.71
  20.94
  19.35
  17.91
  16.62
  15.46
  14.41
  13.47
  12.63
  11.86
  11.18
  10.56
  10.00
  9.50
  9.05
  8.65
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
Revenue, $m
  77,730
  98,616
  122,957
  150,887
  182,487
  217,797
  256,813
  299,502
  345,806
  395,652
  448,957
  505,641
  565,625
  628,843
  695,243
  764,790
  837,466
  913,279
  992,253
  1,074,437
  1,159,901
  1,248,736
  1,341,055
  1,436,990
  1,536,693
  1,640,335
  1,748,106
  1,860,213
  1,976,880
  2,098,351
Variable operating expenses, $m
  75,516
  95,558
  118,916
  145,717
  176,042
  209,925
  247,365
  288,329
  332,763
  380,595
  430,822
  485,216
  542,777
  603,442
  667,160
  733,897
  803,638
  876,388
  952,172
  1,031,036
  1,113,048
  1,198,295
  1,286,885
  1,378,945
  1,474,620
  1,574,076
  1,677,494
  1,785,072
  1,897,027
  2,013,591
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  75,516
  95,558
  118,916
  145,717
  176,042
  209,925
  247,365
  288,329
  332,763
  380,595
  430,822
  485,216
  542,777
  603,442
  667,160
  733,897
  803,638
  876,388
  952,172
  1,031,036
  1,113,048
  1,198,295
  1,286,885
  1,378,945
  1,474,620
  1,574,076
  1,677,494
  1,785,072
  1,897,027
  2,013,591
Operating income, $m
  2,214
  3,058
  4,041
  5,169
  6,446
  7,872
  9,448
  11,173
  13,043
  15,056
  18,135
  20,425
  22,848
  25,401
  28,083
  30,893
  33,828
  36,891
  40,081
  43,400
  46,853
  50,441
  54,170
  58,045
  62,073
  66,259
  70,612
  75,141
  79,853
  84,760
EBITDA, $m
  3,507
  4,450
  5,548
  6,808
  8,234
  9,827
  11,588
  13,514
  15,603
  17,853
  20,258
  22,815
  25,522
  28,375
  31,371
  34,509
  37,788
  41,209
  44,772
  48,481
  52,337
  56,345
  60,511
  64,840
  69,338
  74,015
  78,878
  83,936
  89,200
  94,681
Interest expense (income), $m
  165
  401
  754
  1,170
  1,656
  2,214
  2,844
  3,549
  4,328
  5,180
  6,104
  7,099
  8,163
  9,294
  10,491
  11,753
  13,078
  14,466
  15,917
  17,430
  19,006
  20,647
  22,352
  24,125
  25,968
  27,883
  29,873
  31,941
  34,092
  36,330
  38,658
Earnings before tax, $m
  1,813
  2,305
  2,871
  3,513
  4,232
  5,028
  5,899
  6,845
  7,863
  8,952
  11,036
  12,262
  13,553
  14,910
  16,330
  17,814
  19,362
  20,974
  22,650
  24,394
  26,206
  28,088
  30,045
  32,077
  34,190
  36,386
  38,671
  41,048
  43,523
  46,101
Tax expense, $m
  490
  622
  775
  949
  1,143
  1,358
  1,593
  1,848
  2,123
  2,417
  2,980
  3,311
  3,659
  4,026
  4,409
  4,810
  5,228
  5,663
  6,116
  6,586
  7,076
  7,584
  8,112
  8,661
  9,231
  9,824
  10,441
  11,083
  11,751
  12,447
Net income, $m
  1,324
  1,682
  2,096
  2,565
  3,090
  3,670
  4,306
  4,997
  5,740
  6,535
  8,056
  8,951
  9,894
  10,884
  11,921
  13,004
  14,134
  15,311
  16,535
  17,808
  19,130
  20,505
  21,933
  23,416
  24,958
  26,562
  28,230
  29,965
  31,772
  33,654

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  39,964
  50,702
  63,217
  77,577
  93,824
  111,978
  132,037
  153,986
  177,792
  203,420
  230,826
  259,970
  290,810
  323,313
  357,452
  393,208
  430,574
  469,552
  510,156
  552,410
  596,350
  642,024
  689,488
  738,812
  790,073
  843,360
  898,769
  956,407
  1,016,391
  1,078,844
Adjusted assets (=assets-cash), $m
  39,964
  50,702
  63,217
  77,577
  93,824
  111,978
  132,037
  153,986
  177,792
  203,420
  230,826
  259,970
  290,810
  323,313
  357,452
  393,208
  430,574
  469,552
  510,156
  552,410
  596,350
  642,024
  689,488
  738,812
  790,073
  843,360
  898,769
  956,407
  1,016,391
  1,078,844
Revenue / Adjusted assets
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
  1.945
Average production assets, $m
  6,763
  8,580
  10,697
  13,127
  15,876
  18,948
  22,343
  26,057
  30,085
  34,422
  39,059
  43,991
  49,209
  54,709
  60,486
  66,537
  72,860
  79,455
  86,326
  93,476
  100,911
  108,640
  116,672
  125,018
  133,692
  142,709
  152,085
  161,838
  171,989
  182,557
Working capital, $m
  -7,773
  -9,862
  -12,296
  -15,089
  -18,249
  -21,780
  -25,681
  -29,950
  -34,581
  -39,565
  -44,896
  -50,564
  -56,563
  -62,884
  -69,524
  -76,479
  -83,747
  -91,328
  -99,225
  -107,444
  -115,990
  -124,874
  -134,105
  -143,699
  -153,669
  -164,034
  -174,811
  -186,021
  -197,688
  -209,835
Total debt, $m
  12,559
  19,506
  27,604
  36,894
  47,406
  59,152
  72,130
  86,331
  101,734
  118,315
  136,047
  154,902
  174,856
  195,885
  217,973
  241,108
  265,283
  290,502
  316,773
  344,111
  372,540
  402,091
  432,801
  464,714
  497,880
  532,356
  568,206
  605,498
  644,307
  684,714
Total liabilities, $m
  25,857
  32,804
  40,902
  50,192
  60,704
  72,450
  85,428
  99,629
  115,032
  131,613
  149,345
  168,200
  188,154
  209,183
  231,271
  254,406
  278,581
  303,800
  330,071
  357,409
  385,838
  415,389
  446,099
  478,012
  511,178
  545,654
  581,504
  618,796
  657,605
  698,012
Total equity, $m
  14,107
  17,898
  22,316
  27,385
  33,120
  39,528
  46,609
  54,357
  62,761
  71,807
  81,482
  91,769
  102,656
  114,129
  126,180
  138,802
  151,993
  165,752
  180,085
  195,001
  210,512
  226,634
  243,389
  260,801
  278,896
  297,706
  317,265
  337,612
  358,786
  380,832
Total liabilities and equity, $m
  39,964
  50,702
  63,218
  77,577
  93,824
  111,978
  132,037
  153,986
  177,793
  203,420
  230,827
  259,969
  290,810
  323,312
  357,451
  393,208
  430,574
  469,552
  510,156
  552,410
  596,350
  642,023
  689,488
  738,813
  790,074
  843,360
  898,769
  956,408
  1,016,391
  1,078,844
Debt-to-equity ratio
  0.890
  1.090
  1.240
  1.350
  1.430
  1.500
  1.550
  1.590
  1.620
  1.650
  1.670
  1.690
  1.700
  1.720
  1.730
  1.740
  1.750
  1.750
  1.760
  1.760
  1.770
  1.770
  1.780
  1.780
  1.790
  1.790
  1.790
  1.790
  1.800
  1.800
Adjusted equity ratio
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353
  0.353

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,324
  1,682
  2,096
  2,565
  3,090
  3,670
  4,306
  4,997
  5,740
  6,535
  8,056
  8,951
  9,894
  10,884
  11,921
  13,004
  14,134
  15,311
  16,535
  17,808
  19,130
  20,505
  21,933
  23,416
  24,958
  26,562
  28,230
  29,965
  31,772
  33,654
Depreciation, amort., depletion, $m
  1,293
  1,392
  1,507
  1,639
  1,788
  1,955
  2,140
  2,342
  2,560
  2,796
  2,123
  2,391
  2,674
  2,973
  3,287
  3,616
  3,960
  4,318
  4,692
  5,080
  5,484
  5,904
  6,341
  6,794
  7,266
  7,756
  8,266
  8,796
  9,347
  9,922
Funds from operations, $m
  2,617
  3,074
  3,603
  4,204
  4,878
  5,626
  6,446
  7,338
  8,301
  9,331
  10,179
  11,342
  12,568
  13,858
  15,208
  16,620
  18,094
  19,629
  21,226
  22,888
  24,615
  26,409
  28,273
  30,211
  32,224
  34,318
  36,495
  38,761
  41,119
  43,576
Change in working capital, $m
  -1,761
  -2,089
  -2,434
  -2,793
  -3,160
  -3,531
  -3,902
  -4,269
  -4,630
  -4,985
  -5,331
  -5,668
  -5,998
  -6,322
  -6,640
  -6,955
  -7,268
  -7,581
  -7,897
  -8,218
  -8,546
  -8,884
  -9,232
  -9,593
  -9,970
  -10,364
  -10,777
  -11,211
  -11,667
  -12,147
Cash from operations, $m
  4,378
  5,163
  6,037
  6,996
  8,038
  9,156
  10,348
  11,607
  12,931
  14,316
  15,510
  17,010
  18,567
  20,179
  21,848
  23,575
  25,362
  27,210
  29,124
  31,106
  33,161
  35,292
  37,505
  39,804
  42,195
  44,682
  47,272
  49,971
  52,786
  55,723
Maintenance CAPEX, $m
  -286
  -368
  -466
  -581
  -713
  -863
  -1,030
  -1,214
  -1,416
  -1,635
  -1,871
  -2,123
  -2,391
  -2,674
  -2,973
  -3,287
  -3,616
  -3,960
  -4,318
  -4,692
  -5,080
  -5,484
  -5,904
  -6,341
  -6,794
  -7,266
  -7,756
  -8,266
  -8,796
  -9,347
New CAPEX, $m
  -1,507
  -1,817
  -2,118
  -2,430
  -2,749
  -3,072
  -3,394
  -3,714
  -4,028
  -4,337
  -4,638
  -4,931
  -5,219
  -5,500
  -5,777
  -6,051
  -6,323
  -6,596
  -6,871
  -7,150
  -7,435
  -7,729
  -8,032
  -8,346
  -8,674
  -9,017
  -9,376
  -9,753
  -10,150
  -10,568
Cash from investing activities, $m
  -1,793
  -2,185
  -2,584
  -3,011
  -3,462
  -3,935
  -4,424
  -4,928
  -5,444
  -5,972
  -6,509
  -7,054
  -7,610
  -8,174
  -8,750
  -9,338
  -9,939
  -10,556
  -11,189
  -11,842
  -12,515
  -13,213
  -13,936
  -14,687
  -15,468
  -16,283
  -17,132
  -18,019
  -18,946
  -19,915
Free cash flow, $m
  2,585
  2,978
  3,453
  3,985
  4,575
  5,222
  5,923
  6,679
  7,486
  8,344
  9,001
  9,956
  10,957
  12,005
  13,098
  14,237
  15,423
  16,655
  17,935
  19,265
  20,645
  22,079
  23,569
  25,117
  26,726
  28,399
  30,140
  31,953
  33,840
  35,808
Issuance/(repayment) of debt, $m
  5,873
  6,948
  8,097
  9,291
  10,512
  11,746
  12,979
  14,200
  15,403
  16,581
  17,732
  18,856
  19,954
  21,029
  22,088
  23,134
  24,176
  25,219
  26,271
  27,338
  28,429
  29,551
  30,710
  31,913
  33,166
  34,476
  35,850
  37,292
  38,809
  40,407
Issuance/(repurchase) of shares, $m
  1,867
  2,108
  2,322
  2,504
  2,646
  2,738
  2,775
  2,751
  2,664
  2,511
  1,618
  1,336
  993
  589
  130
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  7,740
  9,056
  10,419
  11,795
  13,158
  14,484
  15,754
  16,951
  18,067
  19,092
  19,350
  20,192
  20,947
  21,618
  22,218
  23,134
  24,176
  25,219
  26,271
  27,338
  28,429
  29,551
  30,710
  31,913
  33,166
  34,476
  35,850
  37,292
  38,809
  40,407
Total cash flow (excl. dividends), $m
  10,324
  12,034
  13,872
  15,780
  17,733
  19,705
  21,677
  23,630
  25,553
  27,437
  28,352
  30,148
  31,904
  33,624
  35,316
  37,372
  39,598
  41,873
  44,205
  46,603
  49,075
  51,630
  54,279
  57,030
  59,892
  62,876
  65,990
  69,245
  72,650
  76,214
Retained Cash Flow (-), $m
  -3,190
  -3,791
  -4,418
  -5,069
  -5,735
  -6,408
  -7,081
  -7,748
  -8,404
  -9,047
  -9,675
  -10,288
  -10,887
  -11,474
  -12,051
  -12,622
  -13,190
  -13,759
  -14,333
  -14,916
  -15,511
  -16,123
  -16,755
  -17,411
  -18,095
  -18,810
  -19,559
  -20,346
  -21,174
  -22,046
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  7,134
  8,243
  9,454
  10,711
  11,997
  13,297
  14,596
  15,883
  17,149
  18,390
  18,677
  19,861
  21,017
  22,150
  23,265
  24,750
  26,408
  28,114
  29,872
  31,687
  33,564
  35,508
  37,524
  39,618
  41,797
  44,066
  46,431
  48,898
  51,475
  54,169
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  6,840
  7,547
  8,228
  8,820
  9,300
  9,650
  9,861
  9,927
  9,851
  9,641
  8,869
  8,475
  7,991
  7,436
  6,830
  6,289
  5,746
  5,178
  4,599
  4,026
  3,472
  2,946
  2,459
  2,018
  1,626
  1,286
  997
  757
  562
  408
Current shareholders' claim on cash, %
  91.7
  85.1
  79.6
  75.2
  71.6
  68.6
  66.1
  64.1
  62.5
  61.2
  60.5
  60.0
  59.7
  59.5
  59.4
  59.4
  59.4
  59.4
  59.4
  59.4
  59.4
  59.4
  59.4
  59.4
  59.4
  59.4
  59.4
  59.4
  59.4
  59.4

Centene Corporation is a healthcare company. The Company provides a portfolio of services to government sponsored healthcare programs, focusing on under-insured and uninsured individuals. The Company operates through two segments: Managed Care and Specialty Services. The Company's Managed Care segment provides health plan coverage to individuals, through government subsidized programs, including Medicaid, the State Children's Health Insurance Program (CHIP), Long Term Care, Foster Care, dual-eligible individuals (Duals) and the Supplemental Security Income Program, also known as the Aged, Blind or Disabled Program (ABD), Medicare, and Health Insurance Marketplace. Its Specialty Services segment consists of its specialty companies offering a range of healthcare services and products to state programs, correctional facilities, healthcare organizations, employer groups and other commercial organizations, as well as to its own subsidiaries.

FINANCIAL RATIOS  of  Centene Corporation (CNC)

Valuation Ratios
P/E Ratio 15.4
Price to Sales 0.2
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 4.7
Price to Free Cash Flow 34.8
Growth Rates
Sales Growth Rate 78.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 854.2%
Cap. Spend. - 3 Yr. Gr. Rate 65%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 78.9%
Total Debt to Equity 79%
Interest Coverage 8
Management Effectiveness
Return On Assets 4.7%
Ret/ On Assets - 3 Yr. Avg. 5.6%
Return On Total Capital 8.1%
Ret/ On T. Cap. - 3 Yr. Avg. 10.6%
Return On Equity 14%
Return On Equity - 3 Yr. Avg. 16.8%
Asset Turnover 2.9
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 3.9%
EBITDA Margin - 3 Yr. Avg. 3.8%
Operating Margin 3.1%
Oper. Margin - 3 Yr. Avg. 3%
Pre-Tax Margin 2.8%
Pre-Tax Margin - 3 Yr. Avg. 2.9%
Net Profit Margin 1.4%
Net Profit Margin - 3 Yr. Avg. 1.5%
Effective Tax Rate 51.8%
Eff/ Tax Rate - 3 Yr. Avg. 47.8%
Payout Ratio 0%

CNC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CNC stock intrinsic value calculation we used $60116 million for the last fiscal year's total revenue generated by Centene Corporation. The default revenue input number comes from 0001 income statement of Centene Corporation. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CNC stock valuation model: a) initial revenue growth rate of 29.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for CNC is calculated based on our internal credit rating of Centene Corporation, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Centene Corporation.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CNC stock the variable cost ratio is equal to 97.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CNC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6% for Centene Corporation.

Corporate tax rate of 27% is the nominal tax rate for Centene Corporation. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CNC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CNC are equal to 8.7%.

Life of production assets of 18.4 years is the average useful life of capital assets used in Centene Corporation operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CNC is equal to -10%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $10917 million for Centene Corporation - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 413.187 million for Centene Corporation is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Centene Corporation at the current share price and the inputted number of shares is $20.8 billion.

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