What is CNC's Intrinsic value?

Centene Corp (CNC) Intrinsic Value Analysis

Executive Summary

As of April 2, 2026, 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 +460.6%
Discounted Cash Flow (5Y) $73.22 +115.7%
Earnings Power Value $41.81 +23.1%

Is Centene Corp (CNC) undervalued or overvalued?

With the current market price at $33.95, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

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:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

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 0.6 1.1
Cost of equity 6.6% 11.0%
Cost of debt 5.0% 5.0%
Tax rate 24.0% 25.5%
Debt/Equity ratio 1.11 1.11
After-tax WACC 5.1% 7.2%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 6.2% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $111,115 (FY12-2020) to $393,001 (FY12-2030)
  • Net profit margin expansion from 2% to 2%
  • Capital expenditures maintained at approximately 1% of revenue
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%

3. Earnings Power Value (EPV)

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

Key Financial Metrics

Metric Value
Market Capitalization $16696M
Enterprise Value $16209M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 8.55
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 1.11

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 46% $57.09
Discounted Cash Flow (5Y) 38% $18.31
Earnings Power Value 15% $4.18
Weighted Average 100% $122.43

Investment Conclusion

Based on our comprehensive valuation analysis, Centene Corp's intrinsic value is $122.43, which is approximately 260.6% above the current market price of $33.95.

Key investment considerations:

  • Strong projected earnings growth (2% to 2% margin)
  • Consistent cash flow generation

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.