Value
6.9/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 10.0 |
| EV/EBITDA | 6.9 |
| Fwd P/E | 8.3 |
| PEG | 6.1 |
| Analyst target | 3.0 |
- ▸Forward P/E: 14.1x
- ▸PEG: 1.21
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.
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VerdictSELL
Overall score4.8/10
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. | →Stable |
| 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. | →Stable |
| 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. | →Stable |
| 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.
→StableQuality 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.
→StableBear 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.
→StableMomentum 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
2.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.8 |
| Gross margin | 0.0 |
| Op margin | 2.0 |
| Net margin | 0.0 |
| Current ratio | 4.4 |
| Moat | 4.4 |
| Piotroski F | 6.7 |
- ▸No competitive moat
- ▸Quality concerns
Growth
4.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.8 |
| EPS growth | 5.7 |
Momentum
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 4.5 |
| erm sentiment | 5.4 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $5,164,000 (0.017% of mkt cap)
Peer rank
4.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 9.1 |
| quality rank | 0.0 |
| growth rank | 4.5 |
Technical
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.9 |
| support resistance | 3.7 |
| 52w position | 9.1 |
Risk (lower is worse)
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.3 |
| days to cover | 8.5 |
| volatility | 3.1 |
| put call | 6.0 |
| implied vol | 3.9 |
| max pain risk | 3.0 |
| beta | 6.6 |
| debt equity | 6.4 |
| news risk | 6.0 |
- ▸Above max pain $30
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 6.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:33d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.1<4.5
- ASYMMETRY:-1.6=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-1.58
Upside
-13.0%
Downside
8.2%
Sizing output
AVOID
SetupRANGE_BOUND — RSI 52 mid-range, Bollinger mid-band
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 6.9 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:3.1<4.5.
The strongest dimensions are Value at 6.9, Catalyst at 6.7, and Risk (lower is worse) at 5.8; the weakest are Quality at 2.3, Momentum at 3.1, and Peer rank at 4.7. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -1.58 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Business 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.
Trip ifQuality score rises above 4.0 for 2 consecutive reporting periods.
- P2A 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.
Trip ifMedicaid segment share of total revenue falls below 50% for 2 consecutive annual filings.
- P3After 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.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters, breaking the recent beat streak.
- P4Momentum 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.
Trip ifMomentum score rises above 4.5 and on-balance volume turns to accumulation for more than 8 consecutive trading sessions.