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

Zacks Equity Research
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Cardinal Health (CAH) closed at $49.50 in the latest trading session, marking a +1.56% move from the prior day. This move outpaced the S&P 500's daily gain of 0.96%. At the same time, the Dow added 0.75%, and the tech-heavy Nasdaq gained 1.58%.

Coming into today, shares of the prescription drug distributor had gained 3.99% in the past month. In that same time, the Medical sector lost 3.37%, while the S&P 500 gained 1.85%.

Investors will be hoping for strength from CAH as it approaches its next earnings release, which is expected to be May 9, 2019. In that report, analysts expect CAH to post earnings of $1.43 per share. This would mark year-over-year growth of 2.88%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $35.14 billion, up 4.49% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.08 per share and revenue of $145 billion. These totals would mark changes of +1.6% and +5.99%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for CAH. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 currently has a Zacks Rank of #3 (Hold).

Digging into valuation, CAH currently has a Forward P/E ratio of 9.6. For comparison, its industry has an average Forward P/E of 22.31, which means CAH is trading at a discount to the group.

Investors should also note that CAH has a PEG ratio of 1.55 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Medical - Dental Supplies was holding an average PEG ratio of 2.19 at yesterday's closing price.

The Medical - Dental Supplies industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 57, which puts it in the top 23% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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