Centene Corporation CNC, one of the largest managed healthcare providers in the United States, has staged an impressive comeback in 2026. The stock has surged 66% year to date, far ahead of the industry’s 28.5% gain. The broader S&P 500 has advanced 10.7% over the same period, while UnitedHealth Group Incorporated UNH and Elevance Health, Inc. ELV have returned 30% and 21.3%, respectively.
The rally marks a sharp reversal from last year's selloff, when rising medical costs forced Centene to withdraw its financial guidance and shook investor confidence. Since then, the company has regained visibility into its business, restored earnings growth and convinced investors that its turnaround is gaining traction. Better execution, improving profitability and a more favorable outlook for managed care have all helped drive the stock higher.
YTD Price Performance: CNC, UNH, ELV, Industry & S&P 500
The first quarter reflected that progress. Centene's health benefits ratio improved 20 basis points from the prior-year period to 87.3%, while premium revenues increased 5.2% year over year to $43.9 billion, supported by higher Prescription Drug Plan (PDP) enrollment and stronger Medicaid reimbursement rates. The balance sheet also improved, with long-term debt declining 6% from year-end 2025 to $16.3 billion. Encouraged by these trends, management raised its 2026 premium and service revenue guidance to a range of $171-$175 billion from the previous outlook of $170-$174 billion.
What Do the Estimates Say Now?
The Zacks Consensus Estimate for 2026 earnings is pegged at $3.46 per share, representing a 66.4% increase from the prior year. Analysts expect another year of growth in 2027, with earnings projected to reach $4.41 per share.
Revenue tells a different story. Estimates call for revenues of $191.03 billion in 2026, down 1.9% year over year, followed by a slight decline to $190.33 billion in 2027. Even so, investors appear focused on margin improvement rather than top-line growth.
Centene has beaten earnings estimates in three of the past four quarters, delivering an average surprise of 74.9%.
Centene Corporation Price, Consensus and EPS Surprise
Centene Corporation price-consensus-eps-surprise-chart | Centene Corporation Quote
CNC’s Valuation
Centene's strong share price performance has naturally lifted its valuation. The stock now trades at a forward price-to-earnings multiple of 17.22X, well above its five-year median of 11.31X. However, it still trades below the industry average of 18.48X. Compared with UnitedHealth at 21.84X and Elevance at 15.15X, Centene sits somewhere in the middle and carries a Value Score of A, suggesting the stock still offers a reasonable balance between price and earnings potential.
Challenges Still Deserve Attention
Despite the recovery, several risks remain. Centene generates most of its revenues from government-sponsored healthcare programs, leaving results closely tied to changes in federal and state policies. Medicaid, Medicare and Affordable Care Act Marketplace plans all depend on reimbursement rates, funding decisions and evolving regulations.
Costs also remain a concern. Total operating expenses increased 5.5% in 2023, 5.8% in 2024 and 26.6% in 2025. During the first quarter of 2026, operating expenses rose another 6.6% year over year. Although management continues to adjust pricing and tighten cost controls, elevated medical costs and ongoing investments could slow the pace of margin improvement.
Capital efficiency also trails peers. Centene's trailing 12-month return on invested capital stands at 4.5%, below the industry average of 5.5%, suggesting there is still room to improve how the company deploys capital.
What Is Working in CNC’s Favor?
Several factors continue to strengthen Centene's long-term outlook. Total membership eased to 26.3 million at the end of the first quarter as the company reshaped its portfolio, but growth is shifting toward businesses with better profitability. PDP membership increased 11.6% year over year, while Medicare Advantage and Dual-Eligible Special Needs Plan retention improved.
The Medicaid business remains another important driver. Improving state reimbursement rates and disciplined pricing are helping lift profitability in one of Centene's largest operations, although competition for new government contracts remains intense.
Management is also focused on improving efficiency. The merger of Carolina Complete Health and WellCare of North Carolina into a single provider-led organization creates a combined business serving more than 980,000 members, including more than 775,000 Medicaid members. The move should deepen relationships with providers while improving care coordination.
Cash generation has strengthened as earnings recover. Net cash from operations climbed to $4.4 billion in the first quarter from $1.5 billion a year earlier. Combined with favorable demographic trends, including an aging population and rising chronic disease rates, this gives Centene a stronger foundation for sustained growth.
Should Investors Buy CNC Stock Now?
Centene has made meaningful progress in rebuilding investor confidence after a difficult 2025. Improving margins, cash generation, balance sheet and an encouraging earnings outlook suggest that the turnaround is gaining momentum. At the same time, the company continues to face familiar challenges, including policy uncertainty, elevated medical costs and intense competition across government-sponsored healthcare programs.
While the stock's sharp rally has reduced some of its valuation appeal, it still trades below the industry average and offers solid long-term fundamentals. With both positive catalysts and lingering risks in play, investors may want to wait for additional evidence of sustained earnings improvement. Centene currently carries a Zacks Rank #3 (Hold), indicating that existing shareholders can stay invested, while new investors may consider waiting for a more attractive entry point. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).