Value
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.4 |
| P/S | 10.0 |
| EV/EBITDA | 7.0 |
| Fwd P/E | 8.9 |
| PEG | 8.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 12.4x
- ▸PEG: 0.83
- ▸Attractively valued
CNC · Why this verdict
Why Centene (CNC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.4/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Centene's business quality sits below the minimum investment threshold with no identified competitive advantage and deteriorating momentum, while a 57% revenue concentration in Medicaid creates meaningful policy risk; three consecutive earnings beats—including an extraordinary positive surprise—provide the only near-term constructive signal but are insufficient to offset the structural quality deficit.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Business quality scores at 2.3 against a 4.0 minimum floor, with no identified competitive advantage and quality concerns flagged across multiple dimensions, indicating the company lacks a durable margin of safety at current prices. Quality breakdown | Quality score rises above 4.0 over the next two reporting periods, driven by improved margins, cash conversion, or competitive-position recognition. | ↑Improving |
| CounterA low quality score in managed care may partly reflect the sector's inherently thin margins and high pass-through revenue structure; if medical-loss ratios normalize and cash conversion improves, the score could recover faster than the current profile implies. | ||
A single government program accounts for 57% of product revenue, creating concentrated exposure to federal and state Medicaid policy decisions that can shift unpredictably and materially impair earnings. Bear case | Medicaid segment share of total revenue falls below 50% over the next 12 months, indicating meaningful diversification progress. | ↑Improving |
| CounterHeavy Medicaid concentration also implies long-term enrollment growth tailwinds and managed-care penetration in government programs; a concentrated position in a growing segment need not be inherently harmful if pricing and rates remain constructive. | ||
After a significant miss at the oldest reported period, the company has delivered three consecutive beats—including extremely large positive surprises—suggesting management has re-established guidance discipline and the business is executing ahead of depressed expectations. Earnings | A fourth consecutive quarterly beat with earnings surprise staying above 5% in the next reporting period. | →Stable |
| CounterThe massive positive surprises likely reflect unusually depressed consensus estimates following the prior significant miss; as estimate revisions catch up to reality, maintaining large positive surprises will become structurally more difficult. | ||
Momentum has failed to clear its minimum gate—scoring 4.1 against a 4.5 requirement—while on-balance volume is in a distribution phase, indicating institutional selling pressure that has not yet shown up fully in price. Momentum breakdown | Momentum score rises above 4.5 and on-balance volume reverses to accumulation for 8 or more consecutive trading sessions. | ↓Deteriorating |
| CounterThe stock remains above its 200-day moving average, meaning the longer-term trend is intact; the falling volume signal may reflect temporary position reduction rather than a structural shift in investor conviction. | ||
Business quality scores at 2.3 against a 4.0 minimum floor, with no identified competitive advantage and quality concerns flagged across multiple dimensions, indicating the company lacks a durable margin of safety at current prices.
↑ImprovingQuality breakdown
- Expectation
- Quality score rises above 4.0 over the next two reporting periods, driven by improved margins, cash conversion, or competitive-position recognition.
CounterA low quality score in managed care may partly reflect the sector's inherently thin margins and high pass-through revenue structure; if medical-loss ratios normalize and cash conversion improves, the score could recover faster than the current profile implies.
A single government program accounts for 57% of product revenue, creating concentrated exposure to federal and state Medicaid policy decisions that can shift unpredictably and materially impair earnings.
↑ImprovingBear case
- Expectation
- Medicaid segment share of total revenue falls below 50% over the next 12 months, indicating meaningful diversification progress.
CounterHeavy Medicaid concentration also implies long-term enrollment growth tailwinds and managed-care penetration in government programs; a concentrated position in a growing segment need not be inherently harmful if pricing and rates remain constructive.
After a significant miss at the oldest reported period, the company has delivered three consecutive beats—including extremely large positive surprises—suggesting management has re-established guidance discipline and the business is executing ahead of depressed expectations.
→StableEarnings
- Expectation
- A fourth consecutive quarterly beat with earnings surprise staying above 5% in the next reporting period.
CounterThe massive positive surprises likely reflect unusually depressed consensus estimates following the prior significant miss; as estimate revisions catch up to reality, maintaining large positive surprises will become structurally more difficult.
Momentum has failed to clear its minimum gate—scoring 4.1 against a 4.5 requirement—while on-balance volume is in a distribution phase, indicating institutional selling pressure that has not yet shown up fully in price.
↓DeterioratingMomentum breakdown
- Expectation
- Momentum score rises above 4.5 and on-balance volume reverses to accumulation for 8 or more consecutive trading sessions.
CounterThe stock remains above its 200-day moving average, meaning the longer-term trend is intact; the falling volume signal may reflect temporary position reduction rather than a structural shift in investor conviction.
Per-dimension breakdown
Quality
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.2 |
| ROA | 1.0 |
| Gross margin | 0.0 |
| Op margin | 0.0 |
| Net margin | 0.4 |
| Current ratio | 4.5 |
| FCF quality | 9.5 |
| Moat | 5.6 |
| Piotroski F | 6.7 |
- ▸Excellent cash conversion: 135% FCF/NI
Growth
5.4/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 5.4 |
Momentum
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 1.8 |
| OBV | 1.0 |
| MA position | 6.0 |
| Volume | 5.2 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.5 |
| Analyst rating | 7.4 |
| Price target | 6.4 |
- ▸LLM news sentiment: +0.50 (n=5)
Insider
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 4.7 |
| notable moves | 3.0 |
- ▸Modest insider selling — $6,891,182 (0.021% of mkt cap)
Peer rank
5.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.3 |
| quality rank | 2.3 |
| growth rank | 5.5 |
Technical
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.3 |
| support resistance | 4.2 |
| 52w position | 8.5 |
Risk (lower is worse)
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.7 |
| days to cover | 8.6 |
| volatility | 2.3 |
| put call | 9.2 |
| implied vol | 4.7 |
| max pain risk | 3.0 |
| debt equity | 6.8 |
| news risk | 5.0 |
- ▸Above max pain $35
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (6)
- INSIDER:OK
- NEWS_BOOST:ANALYST:0.50
- NEWS_BOOST:ANALYST_CLUSTER(4)
- EARNINGS_PROXIMITY:99d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.9<4.5
- ASYMMETRY:-0.1=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.12
Upside
-1.3%
Downside
11.3%
Sizing output
AVOID
SetupRange Bound — RSI 57 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 3.9<4.5 outcome against Catalyst at 7.6 and asymmetric R:R of -0.12.
The strongest dimensions are Catalyst at 7.6, Value at 7.2, and Sentiment at 7.1; the weakest are Quality at 3.3, Insider at 3.5, and Momentum at 3.9. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -0.12 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Quality Below Threshold No Moat
Trip ifQuality score rises above 4.0 for 2 consecutive reporting periods.
- P2Medicaid Concentration Policy Risk
Trip ifMedicaid segment share of total revenue falls below 50% for 2 consecutive annual filings.
- P3Recent Earnings Improvement Streak
Trip ifEPS surprise falls below 0% for 2 consecutive quarters, breaking the recent beat streak.
- P4Momentum Failure Distribution Signal
Trip ifMomentum score rises above 4.5 and on-balance volume turns to accumulation for more than 8 consecutive trading sessions.