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Cardinal Health (CAH) to Post Q4 Earnings: What's in Store?

·4 min read

Cardinal Health, Inc. CAH is scheduled to report fourth-quarter fiscal 2022 results on Aug 11, before the opening bell.

In the last reported quarter, the company delivered a negative earnings surprise of 5.84%. Its earnings beat the Zacks Consensus Estimate in one of the trailing four quarters and missed thrice, the average negative earnings surprise being 9.9%.

Q4 Estimates

For the fiscal fourth quarter, the Zacks Consensus Estimate for earnings is pegged at $1.17 per share, indicating an improvement of 51.95% from the prior-year quarter. The same for revenues stands at $44.6 billion, suggesting growth of 4.72% from the year-ago reported figure.

Factors to Note

Cardinal Health's Pharmaceutical segment is the second-largest pharmaceutical distributor in the United States. In the third quarter of fiscal 2022, pharmaceutical revenues amounted to approximately $41 billion, up 17% on a year-over-year basis. The performance reflects branded pharmaceutical sales growth from Pharmaceutical Distribution and Specialty Solutions customers. This momentum is likely to have continued in the fiscal fourth quarter.

The company’s generics program sales were strong during the last reported quarter. The company's to-be-reported quarter's results are likely to gain from this trend.

Cardinal Health, Inc. Price and Consensus

Cardinal Health, Inc. Price and Consensus
Cardinal Health, Inc. Price and Consensus

Cardinal Health, Inc. price-consensus-chart | Cardinal Health, Inc. Quote

Cardinal Health collaborated with Ember Technologies in January to offer a cold chain solution that ensures product integrity and security across the supply chain while substantially lowering shipping waste in the transport of temperature-sensitive medicines.

During the fiscal first quarter of 2022, Cardinal Health collaborated with TerraPower to help develop and produce Actinium-225, which will be utilized in drug trials involving targeted alpha therapy for diseases such as breast, prostate, colon and neuroendocrine cancers, melanoma and lymphoma.

In June, the company announced the addition of a new distribution center in the Columbus, OH, area, lending support to Cardinal Health’s at-Home Solutions business.

These developments are likely to have favored the company's fiscal fourth-quarter performance.

It is worth mentioning here that in the fiscal third quarter, Cardinal Health's Medical segment displayed considerable weakness due to the divestiture of the Cordis business as well as a decrease in products and distribution volumes. The trend is expected to have continued in the soon-to-be reported quarter.

Meanwhile, Cardinal Health’s medical products and distribution business continued to experience unprecedented inflationary impacts and global supply chain constraints in the United States. While supply chain constraints hurt sales volume, inflationary impacts have been hurting margins. These headwinds are likely to have continued during the fiscal fourth quarter. However, the settlement of opioid litigation during the fiscal third quarter are likely to reduce litigations costs, partially offsetting inflationary impacts.

Here's What the Quantitative Model Suggests

Per our proven model, the combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

Earnings ESP: Cardinal Health has an Earnings ESP of -0.74%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #4 (Sell).

Stocks Worth a Look

Here are a few medical stocks worth considering as these have the right combination of elements to beat on earnings this reporting cycle:

Centessa Pharmaceuticals plc CNTA has an Earnings ESP of +2.70% and a Zacks Rank of 2.

Centessa Pharmaceuticals’earnings surpassed estimates in two of the trailing four quarters and lagged the same in the other two, with the average being 6.2%. Shares of CNTA have declined 52% so far this year. You can see the complete list of today’s Zacks #1 Rank stocks here.

AngioDynamics ANGO has an Earnings ESP of +11.11% and is a Zacks #3 Rank stock. ANGO is estimated to turn profitable in fiscal 2023 compared to breakeven in the year-ago period.

AngioDynamics’ earnings surpassed estimates in two of the trailing four quarters and met the same once, with the average surprise being 153.33%.

Sight Sciences, Inc. SGHT has an Earnings ESP of +14.29% and is a Zacks #2 Ranked stock. SGHT has an estimated growth rate of 23.7% for 2022.

Sight Sciences’ projected EPS growth currently stands at 23.6%, compared with the industry’s 5.5%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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