Are Investors Undervaluing Centene (CNC) Right Now?

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Centene (CNC) is a stock many investors are watching right now. CNC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 7.51. This compares to its industry's average Forward P/E of 11.35. Over the past 52 weeks, CNC's Forward P/E has been as high as 11.12 and as low as 7.51, with a median of 8.77.

Investors will also notice that CNC has a PEG ratio of 0.65. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CNC's industry currently sports an average PEG of 1. Over the past 52 weeks, CNC's PEG has been as high as 1.02 and as low as 0.65, with a median of 0.81.

We should also highlight that CNC has a P/B ratio of 0.99. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.13. CNC's P/B has been as high as 1.54 and as low as 0.99, with a median of 1.16, over the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CNC has a P/S ratio of 0.17. This compares to its industry's average P/S of 0.33.

Finally, investors will want to recognize that CNC has a P/CF ratio of 5.93. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 8.91. Over the past 52 weeks, CNC's P/CF has been as high as 10.44 and as low as 5.93, with a median of 7.29.

These are just a handful of the figures considered in Centene's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that CNC is an impressive value stock right now.

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This article originally published on Zacks Investment Research (zacks.com).

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