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Centene Corporation (CNC) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Centene Corporation (CNC)

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Intrinsic Value (DCF)

Current$47.27
→
Intrinsic$174.49
+269%
$115.64$174.49$286.23
Market implies 1% growth for 5 years
DCF analysis suggests CNC could have 269% upside at 20% growth — verify assumptions match your view.
At $47, the market prices in only 1% growth — below historical 20%, suggesting low expectations.
Range: Bear $116 → Bull $286. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →16%18%20%22%
8%$215$234$254$275
10%$148$161$174$189
12%$111$121$131$142
14%$87$95$103$112

Bull Case

  • Bull case ($286) offers 506% upside at 24% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (20%)

Bear Case

  • Bear case ($116) with 16% growth, 12% discount rate
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5-Year Net Income Projection

Year 1$3.97B
Year 2$4.76B
Year 3$5.71B
Year 4$6.85B
Year 5$8.22B
Terminal$121.01B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Net Income$3.31BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Uses Net Income (FCF not meaningful for insurers). See FAQ below for full methodology.

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Frequently Asked Questions

Is CNC stock undervalued or overvalued?
🟢 UNDERVALUED

CNC trades at $47.27 vs. our DCF-derived intrinsic value of $174.49, implying +281% upside. At a 10.0% WACC and 20.0% projected FCF growth, the market appears to be underpricing the present value of CNC's future cash flows. The bear case ($110.92) still suggests upside, providing margin of safety.

What is CNC's intrinsic value?

Using a 5-year DCF model: Base FCF of $3.31B, projected at 20.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $5.37B net debt and dividing by 0.52B shares: Bear $110.92 | Base $174.49 | Bull $268.10. Current price $47.27 implies +281% to base case.

How is CNC's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($96.75B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.