Cash Rich, Low Price – Centene Stock to Break Out?

We think Centene (CNC) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market.

What Is Happening With CNC

CNC stock is available at a significant discount to its 3-month, 1-year, and 2-year highs. This can be attributed to significant Medicaid membership losses from redeterminations and elevated ACA Marketplace medical costs. Increased Medicare Advantage regulatory scrutiny also contributed to recent market caution.

The stock may not reflect it yet, but here is what’s going well for the company: Centene expanded Wellcare Medicare Advantage plans, diverging from competitors. New D-SNP contracts and 5.5% higher Medicaid rates (late 2025) drive its largest, $88 billion Medicare segment revenue for 2026. Generating $5.1 billion in 2025 operating cash flow and holding a 0.91 debt-to-equity ratio after Q4 2025 debt reduction, Centene projects over 40% adjusted EPS growth for 2026, signaling margin recovery.

CNC Has Strong Fundamentals

• Cash Yield: Centene offers an impressive cash flow yield of 26.8%.
• Growing: Revenue growth of 19.4% over the last twelve months. Although, the 2026 outlook actually projects a revenue contraction due to the exit from certain Marketplace segments and Medicaid redeterminations.
• Valuation Discount: CNC stock is currently trading at 31% below its 3-month high, 49% below its 1-year high, and 59% below its 2-year high.

Below is a quick comparison of CNC fundamentals with S&P medians.

*LTM: Last Twelve Months

But What About The Risk Involved?

While CNC stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. CNC slipped about 53% during the Global Financial Crisis, pulled back 42% in the 2018 correction, and dropped 37% amid the inflation shock. Even the Covid pandemic caused a 33% dip. So despite all the good stuff supporting this stock, when the market turns, CNC can still take a pretty serious hit. Quality and fundamentals matter, but risk remains real in turbulent times. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read CNC Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

If you want to see more details, read Buy or Sell CNC Stock.

Other Stocks Like CNC

Not ready to act on CNC? You could consider these alternatives:

1. AppLovin (APP)
2. Intuit (INTU)
3. Accenture (ACN)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. Positive revenue growth
3. High free cash flow yield
4. Meaningful discount to 3M, 1Y, and 2Y highs

A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have performed as follows:

• Average 6-month and 12-month forward returns of 25.7% and 57.9% respectively
• Win rate (percentage of picks returning positive) of >70% for both 6-month and 12-month periods

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