Intrinsic value of Centene - CNC

Previous Close

$143.71

  Intrinsic Value

$366.28

stock screener

  Rating & Target

str. buy

+155%

Previous close

$143.71

 
Intrinsic value

$366.28

 
Up/down potential

+155%

 
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 2017), $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 24.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  19.20
  17.78
  16.50
  15.35
  14.32
  13.38
  12.55
  11.79
  11.11
  10.50
  9.95
  9.46
  9.01
  8.61
  8.25
  7.92
  7.63
  7.37
  7.13
  6.92
  6.73
  6.55
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
Revenue, $m
  57,671
  67,925
  79,134
  91,283
  104,352
  118,319
  133,164
  148,866
  165,409
  182,779
  200,968
  219,972
  239,793
  260,437
  281,920
  304,258
  327,477
  351,606
  376,680
  402,739
  429,829
  457,999
  487,304
  517,802
  549,557
  582,637
  617,114
  653,066
  690,572
  729,720
Variable operating expenses, $m
  55,766
  65,571
  76,290
  87,908
  100,406
  113,762
  127,959
  142,975
  158,795
  175,406
  192,185
  210,358
  229,312
  249,055
  269,598
  290,960
  313,164
  336,239
  360,217
  385,138
  411,043
  437,982
  466,006
  495,171
  525,538
  557,173
  590,143
  624,523
  660,391
  697,827
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
  55,766
  65,571
  76,290
  87,908
  100,406
  113,762
  127,959
  142,975
  158,795
  175,406
  192,185
  210,358
  229,312
  249,055
  269,598
  290,960
  313,164
  336,239
  360,217
  385,138
  411,043
  437,982
  466,006
  495,171
  525,538
  557,173
  590,143
  624,523
  660,391
  697,827
Operating income, $m
  1,906
  2,354
  2,844
  3,375
  3,946
  4,556
  5,205
  5,892
  6,615
  7,374
  8,783
  9,614
  10,480
  11,382
  12,321
  13,298
  14,312
  15,367
  16,463
  17,602
  18,786
  20,017
  21,298
  22,631
  24,018
  25,464
  26,971
  28,542
  30,182
  31,892
EBITDA, $m
  3,374
  3,974
  4,630
  5,341
  6,105
  6,922
  7,791
  8,709
  9,677
  10,694
  11,758
  12,869
  14,029
  15,237
  16,494
  17,801
  19,159
  20,571
  22,038
  23,562
  25,147
  26,795
  28,510
  30,294
  32,152
  34,087
  36,104
  38,208
  40,402
  42,692
Interest expense (income), $m
  165
  258
  417
  592
  784
  991
  1,214
  1,452
  1,706
  1,974
  2,256
  2,553
  2,863
  3,187
  3,526
  3,878
  4,245
  4,626
  5,022
  5,434
  5,862
  6,306
  6,769
  7,250
  7,750
  8,270
  8,812
  9,377
  9,965
  10,579
  11,219
Earnings before tax, $m
  1,647
  1,937
  2,251
  2,591
  2,955
  3,342
  3,753
  4,186
  4,641
  5,118
  6,231
  6,751
  7,293
  7,857
  8,443
  9,053
  9,687
  10,345
  11,029
  11,740
  12,479
  13,248
  14,048
  14,881
  15,748
  16,652
  17,594
  18,577
  19,603
  20,674
Tax expense, $m
  445
  523
  608
  700
  798
  902
  1,013
  1,130
  1,253
  1,382
  1,682
  1,823
  1,969
  2,121
  2,280
  2,444
  2,615
  2,793
  2,978
  3,170
  3,369
  3,577
  3,793
  4,018
  4,252
  4,496
  4,750
  5,016
  5,293
  5,582
Net income, $m
  1,203
  1,414
  1,644
  1,892
  2,157
  2,440
  2,740
  3,056
  3,388
  3,736
  4,548
  4,928
  5,324
  5,736
  6,164
  6,609
  7,071
  7,552
  8,051
  8,570
  9,110
  9,671
  10,255
  10,863
  11,496
  12,156
  12,844
  13,561
  14,310
  15,092

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
  26,048
  30,680
  35,743
  41,230
  47,133
  53,441
  60,146
  67,239
  74,711
  82,556
  90,772
  99,355
  108,307
  117,632
  127,335
  137,424
  147,912
  158,810
  170,135
  181,906
  194,141
  206,865
  220,101
  233,876
  248,219
  263,160
  278,733
  294,971
  311,912
  329,593
Adjusted assets (=assets-cash), $m
  26,048
  30,680
  35,743
  41,230
  47,133
  53,441
  60,146
  67,239
  74,711
  82,556
  90,772
  99,355
  108,307
  117,632
  127,335
  137,424
  147,912
  158,810
  170,135
  181,906
  194,141
  206,865
  220,101
  233,876
  248,219
  263,160
  278,733
  294,971
  311,912
  329,593
Revenue / Adjusted assets
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
  2.214
Average production assets, $m
  8,535
  10,053
  11,712
  13,510
  15,444
  17,511
  19,708
  22,032
  24,481
  27,051
  29,743
  32,556
  35,489
  38,545
  41,724
  45,030
  48,467
  52,038
  55,749
  59,605
  63,615
  67,784
  72,121
  76,635
  81,334
  86,230
  91,333
  96,654
  102,205
  107,999
Working capital, $m
  -4,960
  -5,842
  -6,806
  -7,850
  -8,974
  -10,175
  -11,452
  -12,802
  -14,225
  -15,719
  -17,283
  -18,918
  -20,622
  -22,398
  -24,245
  -26,166
  -28,163
  -30,238
  -32,394
  -34,636
  -36,965
  -39,388
  -41,908
  -44,531
  -47,262
  -50,107
  -53,072
  -56,164
  -59,389
  -62,756
Total debt, $m
  7,589
  10,771
  14,249
  18,019
  22,074
  26,408
  31,014
  35,887
  41,020
  46,410
  52,054
  57,951
  64,101
  70,507
  77,173
  84,105
  91,309
  98,797
  106,577
  114,663
  123,069
  131,810
  140,903
  150,367
  160,220
  170,485
  181,183
  192,339
  203,977
  216,125
Total liabilities, $m
  17,895
  21,077
  24,555
  28,325
  32,380
  36,714
  41,320
  46,193
  51,326
  56,716
  62,360
  68,257
  74,407
  80,813
  87,479
  94,411
  101,615
  109,103
  116,883
  124,969
  133,375
  142,116
  151,209
  160,673
  170,526
  180,791
  191,489
  202,645
  214,283
  226,431
Total equity, $m
  8,153
  9,603
  11,187
  12,905
  14,752
  16,727
  18,826
  21,046
  23,384
  25,840
  28,411
  31,098
  33,900
  36,819
  39,856
  43,014
  46,296
  49,708
  53,252
  56,937
  60,766
  64,749
  68,892
  73,203
  77,693
  82,369
  87,243
  92,326
  97,628
  103,163
Total liabilities and equity, $m
  26,048
  30,680
  35,742
  41,230
  47,132
  53,441
  60,146
  67,239
  74,710
  82,556
  90,771
  99,355
  108,307
  117,632
  127,335
  137,425
  147,911
  158,811
  170,135
  181,906
  194,141
  206,865
  220,101
  233,876
  248,219
  263,160
  278,732
  294,971
  311,911
  329,594
Debt-to-equity ratio
  0.930
  1.120
  1.270
  1.400
  1.500
  1.580
  1.650
  1.710
  1.750
  1.800
  1.830
  1.860
  1.890
  1.910
  1.940
  1.960
  1.970
  1.990
  2.000
  2.010
  2.030
  2.040
  2.050
  2.050
  2.060
  2.070
  2.080
  2.080
  2.090
  2.090
Adjusted equity ratio
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,203
  1,414
  1,644
  1,892
  2,157
  2,440
  2,740
  3,056
  3,388
  3,736
  4,548
  4,928
  5,324
  5,736
  6,164
  6,609
  7,071
  7,552
  8,051
  8,570
  9,110
  9,671
  10,255
  10,863
  11,496
  12,156
  12,844
  13,561
  14,310
  15,092
Depreciation, amort., depletion, $m
  1,468
  1,620
  1,786
  1,966
  2,159
  2,366
  2,586
  2,818
  3,063
  3,320
  2,974
  3,256
  3,549
  3,854
  4,172
  4,503
  4,847
  5,204
  5,575
  5,961
  6,361
  6,778
  7,212
  7,663
  8,133
  8,623
  9,133
  9,665
  10,220
  10,800
Funds from operations, $m
  2,671
  3,034
  3,429
  3,857
  4,316
  4,806
  5,325
  5,873
  6,451
  7,056
  7,523
  8,184
  8,873
  9,590
  10,336
  11,112
  11,918
  12,756
  13,626
  14,531
  15,471
  16,450
  17,467
  18,527
  19,630
  20,779
  21,977
  23,227
  24,531
  25,892
Change in working capital, $m
  -799
  -882
  -964
  -1,045
  -1,124
  -1,201
  -1,277
  -1,350
  -1,423
  -1,494
  -1,564
  -1,634
  -1,705
  -1,775
  -1,847
  -1,921
  -1,997
  -2,075
  -2,156
  -2,241
  -2,330
  -2,423
  -2,520
  -2,623
  -2,731
  -2,845
  -2,965
  -3,092
  -3,226
  -3,367
Cash from operations, $m
  3,470
  3,916
  4,393
  4,902
  5,440
  6,007
  6,602
  7,224
  7,873
  8,550
  9,087
  9,818
  10,577
  11,365
  12,184
  13,033
  13,915
  14,831
  15,782
  16,772
  17,801
  18,872
  19,987
  21,149
  22,361
  23,624
  24,942
  26,319
  27,756
  29,258
Maintenance CAPEX, $m
  -715
  -854
  -1,005
  -1,171
  -1,351
  -1,544
  -1,751
  -1,971
  -2,203
  -2,448
  -2,705
  -2,974
  -3,256
  -3,549
  -3,854
  -4,172
  -4,503
  -4,847
  -5,204
  -5,575
  -5,961
  -6,361
  -6,778
  -7,212
  -7,663
  -8,133
  -8,623
  -9,133
  -9,665
  -10,220
New CAPEX, $m
  -1,383
  -1,518
  -1,659
  -1,798
  -1,934
  -2,067
  -2,197
  -2,324
  -2,448
  -2,571
  -2,692
  -2,813
  -2,933
  -3,055
  -3,179
  -3,306
  -3,436
  -3,571
  -3,711
  -3,857
  -4,009
  -4,169
  -4,337
  -4,514
  -4,700
  -4,896
  -5,103
  -5,321
  -5,551
  -5,794
Cash from investing activities, $m
  -2,098
  -2,372
  -2,664
  -2,969
  -3,285
  -3,611
  -3,948
  -4,295
  -4,651
  -5,019
  -5,397
  -5,787
  -6,189
  -6,604
  -7,033
  -7,478
  -7,939
  -8,418
  -8,915
  -9,432
  -9,970
  -10,530
  -11,115
  -11,726
  -12,363
  -13,029
  -13,726
  -14,454
  -15,216
  -16,014
Free cash flow, $m
  1,372
  1,544
  1,729
  1,933
  2,155
  2,395
  2,654
  2,929
  3,222
  3,531
  3,690
  4,031
  4,388
  4,761
  5,150
  5,554
  5,975
  6,413
  6,868
  7,340
  7,831
  8,341
  8,872
  9,424
  9,997
  10,595
  11,217
  11,864
  12,540
  13,244
Issuance/(repayment) of debt, $m
  2,890
  3,182
  3,478
  3,770
  4,055
  4,334
  4,606
  4,872
  5,133
  5,390
  5,644
  5,897
  6,150
  6,406
  6,666
  6,932
  7,205
  7,487
  7,780
  8,086
  8,406
  8,741
  9,093
  9,463
  9,854
  10,265
  10,698
  11,156
  11,638
  12,147
Issuance/(repurchase) of shares, $m
  101
  36
  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 from financing (excl. dividends), $m  
  2,991
  3,218
  3,478
  3,770
  4,055
  4,334
  4,606
  4,872
  5,133
  5,390
  5,644
  5,897
  6,150
  6,406
  6,666
  6,932
  7,205
  7,487
  7,780
  8,086
  8,406
  8,741
  9,093
  9,463
  9,854
  10,265
  10,698
  11,156
  11,638
  12,147
Total cash flow (excl. dividends), $m
  4,362
  4,762
  5,207
  5,702
  6,210
  6,729
  7,260
  7,802
  8,355
  8,921
  9,334
  9,928
  10,539
  11,167
  11,816
  12,486
  13,180
  13,900
  14,648
  15,426
  16,237
  17,083
  17,965
  18,887
  19,851
  20,859
  21,915
  23,020
  24,178
  25,391
Retained Cash Flow (-), $m
  -1,303
  -1,450
  -1,585
  -1,717
  -1,848
  -1,975
  -2,099
  -2,220
  -2,339
  -2,456
  -2,571
  -2,687
  -2,802
  -2,919
  -3,037
  -3,158
  -3,283
  -3,411
  -3,545
  -3,684
  -3,830
  -3,982
  -4,143
  -4,312
  -4,489
  -4,677
  -4,874
  -5,083
  -5,302
  -5,534
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
  145
  173
  204
  237
  274
  313
  355
  399
  447
  496
  548
  603
  660
  719
  781
  846
  913
  982
  1,055
  1,130
  1,208
  1,289
  1,374
  1,462
  1,553
  1,649
  1,748
  1,851
  1,959
  2,072
Cash available for distribution, $m
  3,059
  3,312
  3,623
  3,985
  4,363
  4,755
  5,161
  5,582
  6,016
  6,465
  6,763
  7,241
  7,736
  8,249
  8,779
  9,328
  9,898
  10,489
  11,103
  11,742
  12,407
  13,100
  13,822
  14,575
  15,362
  16,183
  17,041
  17,938
  18,876
  19,857
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
  2,933
  3,032
  3,153
  3,281
  3,382
  3,451
  3,487
  3,489
  3,456
  3,389
  3,211
  3,090
  2,942
  2,769
  2,577
  2,370
  2,154
  1,932
  1,710
  1,492
  1,283
  1,087
  906
  742
  598
  472
  366
  278
  206
  150
Current shareholders' claim on cash, %
  99.6
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5
  99.5

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 (CNC)

Valuation Ratios
P/E Ratio 44
Price to Sales 0.6
Price to Book 4.2
Price to Tangible Book
Price to Cash Flow 13.3
Price to Free Cash Flow 99.6
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 $48382 million for the last fiscal year's total revenue generated by Centene. The default revenue input number comes from 2017 income statement of Centene. 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 19.2% 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, 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.
    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 96.9%.

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 5.5% for Centene.

Corporate tax rate of 27% is the nominal tax rate for Centene. 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 0.3%.

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 14.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Centene 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 -8.6%. 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 - $6850 million for Centene - 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 173 million for Centene 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 at the current share price and the inputted number of shares is $24.9 billion.

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COMPANY NEWS

▶ Labor union withdraws challenge to Centene campus plan   [Aug-14-18 02:59PM  American City Business Journals]
▶ Centene Stock May Soon Need Some Care of Its Own   [Jul-25-18 02:49PM  TheStreet.com]
▶ Centene: 2Q Earnings Snapshot   [06:14AM  Associated Press]
▶ A Preview Of Centene's Q2 Earnings   [Jul-23-18 03:32PM  Benzinga]
▶ EXCLUSIVE: Union files challenge to proposal for Centene corporate campus   [Jul-20-18 10:22AM  American City Business Journals]
▶ Envolve Earns NCQA Utilization Management Accreditation   [Jul-17-18 07:00AM  PR Newswire]
▶ First building permit applications filed for Centene corporate hub in Natomas   [Jul-12-18 10:53AM  American City Business Journals]
▶ Centene CEO Sees Disruption as a Force for Good in Health Care   [Jul-11-18 05:24PM  Bloomberg Video]
▶ ObamaCare Just Blew Up; Can Centene Pick Up The Pieces?   [Jul-09-18 04:05PM  Investor's Business Daily]
▶ After-hours buzz: MLHR, ACXM & more   [Jul-02-18 05:13PM  CNBC]
▶ Centene closes on Fidelis acquisition   [03:45PM  American City Business Journals]
▶ [$$] ObamaCare Can Be Worse Than Medicaid   [Jun-26-18 08:00PM  The Wall Street Journal]
▶ The Shuman Law Firm Investigates Centene Corp.   [Jun-25-18 02:01PM  Business Wire]
▶ Centene's Kansas Subsidiary Wins Medicaid Contract   [Jun-22-18 12:34PM  PR Newswire]
▶ Centene announces leadership changes   [Jun-08-18 12:50PM  American City Business Journals]
▶ Centene expands state contract in Washington   [12:23PM  American City Business Journals]
▶ Centene Awarded Statewide Medicaid Contract In Iowa   [May-22-18 07:00AM  PR Newswire]
▶ The Shuman Law Firm Investigates Centene Corp.   [May-14-18 12:37PM  Business Wire]
▶ AG solicits public comment on $3.75B Fidelis Care sale   [May-11-18 01:20PM  American City Business Journals]
▶ Possible Centene site fuels new housing development   [May-10-18 05:05PM  American City Business Journals]
▶ Fidelis Care sale leads to $3.2B statewide charitable foundation   [May-08-18 11:06AM  American City Business Journals]
▶ Centene Subsidiary Awarded Contract in Florida   [May-02-18 07:00AM  PR Newswire]
▶ Centene Corporation Prices Offering Of Common Stock   [May-01-18 06:40PM  PR Newswire]
▶ Buffett: Todd Combs is spending most of his time on health care   [Apr-30-18 04:06PM  Yahoo Finance Video]
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