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Cardinal Health (CAH) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
FS Bancorp (FSBW) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Cardinal Health (CAH) closed at $47.47 in the latest trading session, marking a +1.32% move from the prior day. This move outpaced the S&P 500's daily gain of 0.47%. Meanwhile, the Dow gained 0.31%, and the Nasdaq, a tech-heavy index, added 0.34%.

Coming into today, shares of the prescription drug distributor had lost 2.23% in the past month. In that same time, the Medical sector lost 4.29%, while the S&P 500 gained 4.67%.

Investors will be hoping for strength from CAH as it approaches its next earnings release, which is expected to be May 9, 2019. The company is expected to report EPS of $1.43, up 2.88% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $35.14 billion, up 4.49% from the year-ago period.

CAH's full-year Zacks Consensus Estimates are calling for earnings of $5.08 per share and revenue of $145 billion. These results would represent year-over-year changes of +1.6% and +5.99%, respectively.

It is also important to note the recent changes to analyst estimates for CAH. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.1% lower. CAH is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, CAH currently has a Forward P/E ratio of 9.22. For comparison, its industry has an average Forward P/E of 21.71, which means CAH is trading at a discount to the group.

Meanwhile, CAH's PEG ratio is currently 1.49. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Medical - Dental Supplies industry currently had an average PEG ratio of 2.24 as of yesterday's close.

The Medical - Dental Supplies industry is part of the Medical sector. This group has a Zacks Industry Rank of 69, putting it in the top 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
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