Centene Corporation (CNC)
Seguro de salud administrado
The country's largest Medicaid, Marketplace, and standalone Medicare Part D insurer trades near its 52-week high after a year of operational stress ($6,723 million goodwill impairment and health benefits ratio compression); Undervalued, with an estimated annual return of +15% if adjusted earnings normalize per the elevated July 2026 guidance.
- Price
- $65.23
- Intrinsic value (5y, base)
- $129
- Total annual return (5y)
- 14.6%
- Status (nominal)
- Undervalued
- Margin of safety
- +37%
The essentials
- The country's largest Medicaid, ACA Marketplace, and standalone Medicare Part D insurer, with 27.6 million members
- The $6,723 million goodwill impairment in 2025 drags down trailing-twelve-month reported earnings; normalized adjusted earnings return to positive territory
- July 2026 guidance was raised (adjusted EPS floor of $4.80), but it includes approximately $0.50 of non-recurring items in Medicare and Commercial
Intrinsic value — two valuation methods
By both methods, the value today (DCF $140 · Multiples $104) exceeds the market price ($65).
Pillars of the analysis
The verdict — today vs 5 years
Today — fairly valued: at $65 trades ~37.0% below its value discounted to today (~$104); the discount is positive but does not reach the margin of safety we require (≥38%).
At 5 years — Infravalorado: the target price ($129) plus dividends yield above the required average return (10%) — the business compounds.
The bridge: the return at 5 years exceeds the risk-free rate (4.5%) — but the discount does not reach the required margin of safety (≥38%). To require a 15% annual return, it would need to be bought at ~$64.
Thesis
The business
The country's largest Medicaid, Marketplace, and Medicare Part D insurer, with regulatory and data scale as its main source of moat, but under real pressure: a rising HBR, protested state contract losses, and regulatory headwinds from the OBBBA on 2026 membership.
The valuation
Valued at 15× on normalized adjusted earnings, excluding the non-cash impairments of 2025. The 5-year value comes from adjusted earnings projected per guidance and its margin recovery toward the historical band, capitalized at a multiple within the band for regulated managed-care insurers.
The margin of safety
It trades at a real discount to value, though short of the required margin of safety. The market price is just 2% below the 52-week high, reflecting that much of the recovery implied by guidance is already priced in.
What to watch
The central disconfirmer is whether the health benefits ratio (HBR) normalizes back toward the historical range or whether medical-cost pressure and the loss of Medicaid/Marketplace membership from the OBBBA deepen in 2026-2027, which would invalidate the margin recovery underpinning the base case.
Educational / informational. Does not constitute investment advice.