Why Centene Corp. Shares Jumped

Centene delivers strong membership gains as both its profit and outlook top Wall Street's estimates. Can shares head even higher?

Apr 22, 2014 at 1:02PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Centene (NYSE:CNC), a provider of managed care and specialty services within the U.S., vaulted higher by as much as 18% after reporting its first quarter results and updating its full-year guidance.

So what: For the quarter Centene, which predominantly caters to lower-to-middle income individuals and families on Medicaid, reported a 13% increase in managed care membership to 2.89 million, a 90 basis point drop in its health benefits ratio (a measure of margin where lower is better), and a 32% surge in revenue to $3.35 billion from the year-ago period. Along those same lines, Centene's profit jumped to $0.57 per share from $0.44 in the year-ago quarter. By comparison, Wall Street anticipated just $0.45 in EPS on $3.25 billion in revenue. Furthermore, Centene boosted its full-year revenue and EPS forecast to a range of $14.2 billion-$14.8 billion in revenue on $3.60-$3.90 in EPS. While revenue was on par with the Street, the current consensus of $3.62 for the year is at the low end of estimates. In other words, Centene's EPS midpoint offers modest upside to Wall Street's current full-year consensus.

Now what: Centene shareholders really couldn't have asked for a better quarter. Although the company picked up less than 40,000 health insurance market enrollees under the Affordable Care Act, its bread and butter has always been Medicaid and CHIP enrollments. For the quarter, compared to last year at this time, it added nearly 218,000 Medicaid members and 3,800 CHIP and foster care members, which should in some way be attributed to the Medicaid expansion under Obamacare. Although there is some uncertainty as to what might happen to these Medicaid-based insurers as the government looks for ways to reduce long-term spending, nearly every metric from this report would indicate that Centene is set up for long-term success.

Centene may have roared higher today, but it'll likely struggle to keep pace with this top stock in 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers