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Can Centene's (CNC) Q3 Earnings Beat on Membership Growth?
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Centene Corporation (CNC - Free Report) is set to beat on earnings for the third quarter of 2023, the results for which are scheduled to be released on Oct 24, before the opening bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for third-quarter earnings per share of $1.54 suggests an 18.5% increase from the prior-year figure of $1.30. The consensus mark has jumped 4 cents over the past week. The consensus estimate for third-quarter revenues of $36.2 billion indicates a 0.9% increase from the year-ago reported figure.
Centene beat the consensus estimate for earnings in two of the prior four quarters and missed twice, with the average surprise being 0.6%. This is depicted in the graph below:
Our proven model predicts a likely earnings beat for Centene this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is precisely the case here.
Earnings ESP: Centene has an Earnings ESP of +12.36%. This is because the Most Accurate Estimate is currently pegged at $1.74 per share, higher than the Zacks Consensus Estimate of $1.54. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Centene currently has a Zacks Rank #3.
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at CNC’s previous-quarter performance first.
Q2 Earnings Rewind
In the last reported quarter, this leading multi-national healthcare company reported adjusted earnings per share of $2.10, beating the Zacks Consensus Estimate by 2.4%, thanks to growing marketplace membership, business wins and Medicaid growth. However, the positives were partially offset by rising operating expenses.
Now, let’s see how things have shaped up prior to the third-quarter earnings announcement.
Factors Driving Q3 Performance
Centene's third-quarter performance is expected to have benefited from enhanced volumes and contributions from both its Commercial and Medicaid businesses. The positives are expected to have been amplified by higher premiums, expansions, the launch of new programs across multiple states and growth in membership.
Medical memberships of the company have been rising over the past several quarters on contract wins and expansion across different regions, and the momentum is expected to have continued in the third quarter. The Zacks Consensus Estimate for overall membership growth is pegged at 5.3%, whereas our estimate suggests a more than 6% increase.
The Zacks Consensus Estimate for the company’s premiums indicates an almost 4% improvement from the prior-year reported level of $31.8 billion, whereas our estimate suggests 4.6% year-over-year growth. Centene’s performance is expected to have received a boost from its membership growth in the Marketplace business, as well as organic Medicaid growth.
Further, falling cost of services in the quarter under review are likely to have aided the bottom line. Our estimate for the metric suggests a nearly 44% year-over-year decline, positioning the company for significant year-over-year growth and a likely earnings surprise.
However, the consensus estimate for service revenues indicates a more than 40% fall from the year-ago quarter’s $1.9 billion, while our estimate predicts a 47% slump. The Zacks Consensus Estimate for the company’s investment and other income indicates a 44.8% year-over-year decline from $692 million, whereas our model predicts an almost 39% decrease. This is likely to have partially offset the positives.
Other Stocks That Warrant a Look
Here are some other companies worth considering from the broader Medical space, as our model shows that these, too, have the right combination of elements to beat on earnings this time around:
The Zacks Consensus Estimate for Apellis’ earnings per share for the to-be-reported quarter indicates a 49.1% year-over-year improvement. APLS beat earnings estimates twice in the past four quarters and missed on two occasions, the average surprise being 1.4%.
AstraZeneca PLC (AZN - Free Report) has an Earnings ESP of +5.13% and a Zacks Rank #3.
The Zacks Consensus Estimate for AstraZeneca’s bottom line for the to-be-reported quarter is pegged at 82 cents per share, which improved 3.8% in the past 30 days. AZN beat earnings estimates in each of the past four quarters, the average surprise being 8.4%.
Jazz Pharmaceuticals plc (JAZZ - Free Report) has an Earnings ESP of +3.34% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Jazz Pharmaceuticals’s bottom line for the to-be-reported quarter has improved 0.8% in the past 60 days. The consensus mark for JAZZ’s revenues is pegged at $969 million, signaling 3% year-over-year growth.
Image: Shutterstock
Can Centene's (CNC) Q3 Earnings Beat on Membership Growth?
Centene Corporation (CNC - Free Report) is set to beat on earnings for the third quarter of 2023, the results for which are scheduled to be released on Oct 24, before the opening bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for third-quarter earnings per share of $1.54 suggests an 18.5% increase from the prior-year figure of $1.30. The consensus mark has jumped 4 cents over the past week. The consensus estimate for third-quarter revenues of $36.2 billion indicates a 0.9% increase from the year-ago reported figure.
Centene beat the consensus estimate for earnings in two of the prior four quarters and missed twice, with the average surprise being 0.6%. This is depicted in the graph below:
Centene Corporation Price and EPS Surprise
Centene Corporation price-eps-surprise | Centene Corporation Quote
What the Quantitative Model Suggests
Our proven model predicts a likely earnings beat for Centene this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is precisely the case here.
Earnings ESP: Centene has an Earnings ESP of +12.36%. This is because the Most Accurate Estimate is currently pegged at $1.74 per share, higher than the Zacks Consensus Estimate of $1.54. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Centene currently has a Zacks Rank #3.
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at CNC’s previous-quarter performance first.
Q2 Earnings Rewind
In the last reported quarter, this leading multi-national healthcare company reported adjusted earnings per share of $2.10, beating the Zacks Consensus Estimate by 2.4%, thanks to growing marketplace membership, business wins and Medicaid growth. However, the positives were partially offset by rising operating expenses.
Now, let’s see how things have shaped up prior to the third-quarter earnings announcement.
Factors Driving Q3 Performance
Centene's third-quarter performance is expected to have benefited from enhanced volumes and contributions from both its Commercial and Medicaid businesses. The positives are expected to have been amplified by higher premiums, expansions, the launch of new programs across multiple states and growth in membership.
Medical memberships of the company have been rising over the past several quarters on contract wins and expansion across different regions, and the momentum is expected to have continued in the third quarter. The Zacks Consensus Estimate for overall membership growth is pegged at 5.3%, whereas our estimate suggests a more than 6% increase.
The Zacks Consensus Estimate for the company’s premiums indicates an almost 4% improvement from the prior-year reported level of $31.8 billion, whereas our estimate suggests 4.6% year-over-year growth. Centene’s performance is expected to have received a boost from its membership growth in the Marketplace business, as well as organic Medicaid growth.
Further, falling cost of services in the quarter under review are likely to have aided the bottom line. Our estimate for the metric suggests a nearly 44% year-over-year decline, positioning the company for significant year-over-year growth and a likely earnings surprise.
However, the consensus estimate for service revenues indicates a more than 40% fall from the year-ago quarter’s $1.9 billion, while our estimate predicts a 47% slump. The Zacks Consensus Estimate for the company’s investment and other income indicates a 44.8% year-over-year decline from $692 million, whereas our model predicts an almost 39% decrease. This is likely to have partially offset the positives.
Other Stocks That Warrant a Look
Here are some other companies worth considering from the broader Medical space, as our model shows that these, too, have the right combination of elements to beat on earnings this time around:
Apellis Pharmaceuticals, Inc. (APLS - Free Report) has an Earnings ESP of +13.77% and is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Apellis’ earnings per share for the to-be-reported quarter indicates a 49.1% year-over-year improvement. APLS beat earnings estimates twice in the past four quarters and missed on two occasions, the average surprise being 1.4%.
AstraZeneca PLC (AZN - Free Report) has an Earnings ESP of +5.13% and a Zacks Rank #3.
The Zacks Consensus Estimate for AstraZeneca’s bottom line for the to-be-reported quarter is pegged at 82 cents per share, which improved 3.8% in the past 30 days. AZN beat earnings estimates in each of the past four quarters, the average surprise being 8.4%.
Jazz Pharmaceuticals plc (JAZZ - Free Report) has an Earnings ESP of +3.34% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Jazz Pharmaceuticals’s bottom line for the to-be-reported quarter has improved 0.8% in the past 60 days. The consensus mark for JAZZ’s revenues is pegged at $969 million, signaling 3% year-over-year growth.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.