Centene (CNC) To Report Q2 Earnings: What's In The Cards?

Centene Corporation (NYSE:CNC) will release second-quarter 2017 results on Jul 25, before the market opens.

Last quarter, the company delivered a positive earnings surprise of 5.66%. Let’s see how things are shaping up for this announcement.

Factors to be Considered this Quarter

The buyout of Health Net is expected to have boosted the company’s growth potential, significantly increasing revenues.

The company’s Missouri Medicaid contract, active since May 1, 2017, is likely to have increased the membership, thereby boosting revenue growth in the second quarter.

The Medicare Advantage plans, operational in four new states since Jan 2017, is expected to have continued contributing to the company’s revenue growth.

The company’s Government-sponsored Health Insurance business is anticipated to have performed well, adding to the top line.

The company’s share repurchase programs intended to enhance shareholders’ value might have impacted margins positively by reducing the outstanding share count.

Nevertheless, Health Net’s high selling general and administrative expenses are expected to have increased its overall costs, thereby limiting bottom-line growth.

Increasing costs related to interest payment, reserves for settlements, legal judgments and lawsuits, impairments of long-lived assets might have affected earnings.

Earnings Whispers

Our proven model does not conclusively show that Centene is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Centene has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.30. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Centene Corporation Price and EPS Surprise

Zacks Rank: Centene carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, we need a positive Earnings ESP to be confident about an earnings beat.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies from the medical sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

Align Technology, Inc. (NASDAQ:ALGN) , which is set to report second-quarter earnings on Jul 27, has an Earnings ESP of +1.37% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pfizer, Inc. (NYSE:PFE) has an Earnings ESP of +1.54% and a Zacks Rank #3. The company is set to report second-quarter earnings on Aug 1.

Humana, Inc. (NYSE:HUM) has an Earnings ESP of +1.3% and a Zacks Rank #3 The company is set to report second-quarter earnings on Aug 2.

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