As of July 10, 2025, Centene Corp's estimated intrinsic value ranges from $41.81 to $190.31 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $190.31 | +475.1% |
| Discounted Cash Flow (5Y) | $73.22 | +121.3% |
| Dividend Discount Model (Multi-Stage) | $58.30 | +76.2% |
| Dividend Discount Model (Stable) | $54.84 | +65.7% |
| Earnings Power Value | $41.81 | +26.3% |
Is Centene Corp (CNC) undervalued or overvalued?
With the current market price at $33.09, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Centene Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.56 | 0.9 |
| Cost of equity | 6.4% | 9.9% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 25.8% | 29.9% |
| Debt/Equity ratio | 0.69 | 0.69 |
| After-tax WACC | 5.3% | 7.3% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $73 | $49,800M | 84.6% |
| 10-Year Growth | $190 | $118,030M | 77.6% |
| 5-Year EBITDA | $108 | $70,018M | 89.1% |
| 10-Year EBITDA | $168 | $104,942M | 74.8% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,870M |
| Discount Rate (WACC) | 7.2% - 5.1% |
| Enterprise Value | $25,966M - $37,020M |
| Net Debt | $7,130M |
| Equity Value | $18,836M - $29,890M |
| Outstanding Shares | 583M |
| Fair Value | $32 - $51 |
| Selected Fair Value | $41.81 |
| Metric | Value |
|---|---|
| Market Capitalization | $26718M |
| Enterprise Value | $30223M |
| Trailing P/E | 7.74 |
| Forward P/E | 7.41 |
| Trailing EV/EBITDA | 8.55 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 0.69 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $57.09 |
| Discounted Cash Flow (5Y) | 25% | $18.31 |
| Dividend Discount Model (Multi-Stage) | 20% | $11.66 |
| Dividend Discount Model (Stable) | 15% | $8.23 |
| Earnings Power Value | 10% | $4.18 |
| Weighted Average | 100% | $99.47 |
Based on our comprehensive valuation analysis, Centene Corp's intrinsic value is $99.47, which is approximately 200.6% above the current market price of $33.09.
Key investment considerations:
Given these factors, we believe Centene Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.