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Here's Why You Should Invest in Cardinal Health (CAH) Stock

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Zacks Equity Research
·3 min read
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Cardinal Health Inc. CAH is well poised for growth on the back of diversified product portfolio, acquisition-driven strategy and robust pharmaceutical segment.

The stock has gained 15.5% compared with the industry’s growth of 13.9% in a year’s time. Further, the S&P 500 Index has rallied 11.6% in the same time frame.

Cardinal Health — with a market capitalization of $17.16 billion — is a nation-wide drug distributor and provider of services to pharmacies, healthcare providers and manufacturers. It anticipates earnings to improve 5.4% over the next five years. Moreover, the company beat estimates in each of the trailing four quarters, with the average surprise being 21.4%.

Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #2 (Buy).

Key Catalysts

Cardinal Health’s Medical and Pharmaceutical offerings provide the company with a competitive edge in the niche space. It offers industry expertise through an expanding portfolio of safe products.

The company follows an acquisition-driven strategy and remains committed toward investment in key growth businesses to gain market traction and bolster profits.



Cardinal Health’s Pharmaceutical segment is the second-largest pharmaceutical distributor in the United States. The segment’s products and services comprise pharmaceutical distribution, manufacturer and specialty solutions, and nuclear and pharmacy offerings. The segment’s strength is anticipated to drive its performance in the days ahead.

For fiscal 2021, the company continues to expect Pharmaceutical segment to witness mid-single digit percentage growth in revenues and low-single digit percentage growth with respect to profit. Higher contribution from key growth areas — Specialty and Connected Care — and sustained market dynamics withing its generics program are expected to bolster the segment.

Which Way are Estimates Headed?

For fiscal 2021, the Zacks Consensus Estimate for revenues is pegged at $160.61 billion, indicating an improvement of 5% from the prior year. The same for adjusted earnings per share stands at $5.78, suggesting growth of 6.1% from the year-ago reported figure.

Other Stocks to Consider

Some other top-ranked stocks from the broader medical space include Merit Medical Systems, Inc. MMSI, Align Technology, Inc. ALGN and Patterson Companies Inc. PDCO, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Merit Medical has a projected long-term earnings growth rate of 12.6%.

Align Technology has an estimated long-term earnings growth rate of 18.3%.

Patterson Companies has a projected long-term earnings growth rate of 8.9%.

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Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
 
Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report
 
Patterson Companies, Inc. (PDCO) : Free Stock Analysis Report
 
Align Technology, Inc. (ALGN) : Free Stock Analysis Report
 
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Zacks Investment Research