Is Centene Stock a Smart Buy Ahead of Q2 Earnings? Key Estimates

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For 2026, the Zacks Consensus Estimate for Centene’s revenues is pegged at $190.97 billion, implying a fall of 2% year over year. Yet, the consensus mark for 2026 EPS is pegged at $3.46, signaling a growth of 66.4% year over year.

Centenebeat earnings estimates in three of the last four quarters and missed once, with the average surprise being 74.9%. This is depicted in the figure below.

Q2 Earnings Whispers for Centene

Our proven model does not conclusively predict an earnings beat for the company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. That’s not the case here.

CNC has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

What’s Shaping Centene’s Q2 Results?

The Zacks Consensus Estimate for the company’s total commercial memberships indicates a 39.1% year-over-year decrease, primarily due to a decline in the commercial marketplace. The consensus estimate for the company’s total Medicaid memberships indicates a 4.6% decline from a year ago.

As such, the Zacks Consensus Estimate for total membership indicates a 7.6% year-over-year decline, which reflects its portfolio optimization efforts. However, the consensus mark for Medicare PDP memberships signals 12.1% growth from the year-ago quarter.

The consensus estimate projects the company’s premium growth at only 1.8% year over year. The consensus mark for the company’s investment and other income indicates a 3.2% year-over-year decline from $371 million. Moreover, the projection for service revenues indicates a 0.6% fall from the year-ago quarter’s $727 million. These are likely to have affected the second quarter top line.

Nevertheless, due to its cost-curbing efforts, better pricing and portfolio optimization, the bottom line is likely to have improved. The Zacks Consensus Estimate for the total health benefits ratio is pegged at 91.5%, down from 93% in the year-ago period, meaning a higher portion of premiums remaining in hand after paying claims.

CNC’s Price Performance & Valuation

Centene's stock has gained 64.3% in the year-to-date period compared with the industry’s growth of 31%. Its peers, such as Humana Inc. HUM and Molina Healthcare, Inc. MOH, have jumped 57.9% and 30.5%, respectively, during this time. Meanwhile, the S&P 500 has only increased 9.5%.

YTD Price Performance – CNC, HUM, MOH, Industry & S&P 500

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Now, let’s look at the value Centene offers investors at current levels.

CNC is trading at 16.91X forward 12-month earnings, above its five-year median of 11.31X. But it is still below the industry’s average of 18.12X. In comparison, Humana and Molina Healthcare are currently trading at 31.75X and 31.80X, respectively.

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How Should You Play CNC Stock Now?

The company has made meaningful progress in restoring profitability through disciplined pricing, portfolio optimization and cost-control initiatives following last year's setback. A healthier medical benefit ratio, stronger cash generation and improving performance in its Medicaid and Medicare businesses provide reasons for optimism, while the stock's sharp year-to-date rally reflects growing investor confidence in the turnaround.

However, expectations have also become more demanding. Membership declines tied to portfolio optimization are likely to weigh on revenue growth, and Centene remains exposed to policy changes affecting government-sponsored healthcare programs. Elevated operating costs, despite signs of moderation, and below-average capital efficiency also suggest that the turnaround is still a work in progress.

Given these factors, existing shareholders may prefer to hold the stock and monitor management's commentary on medical costs, reimbursement trends and membership growth after the earnings release. New investors, meanwhile, may benefit from waiting for greater clarity on the company's execution and full-year outlook before initiating positions.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research