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Cardinal Health (CAH) to Post Q1 Earnings: What's in Store?

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Cardinal Health, Inc. (CAH - Free Report) is scheduled to report first-quarter fiscal 2021 results on Nov 5, before the opening bell.

In the last reported quarter, the company delivered an earnings surprise of 14.3%. It beat estimates in each of the trailing four quarters, the average surprise being 17.4%.

Q1 Estimates

For the fiscal first quarter, the Zacks Consensus Estimate for earnings is pegged at $1.10 per share, indicating a decline 13.4% from the prior-year quarter. The same for revenues stands at $38.48 billion, suggesting growth of 3.1% from the year-ago reported figure.

Factors to Note

Cardinal Health’s Pharmaceutical segment is the second largest pharmaceutical distributor in the United States. Elective procedures and physician office visits are expected to recover to pre-COVID 19 levels exiting fiscal 2021, with a more substantial impact in the first half of the year. This might get reflected in the segment’s results in the to-be-reported quarter.

In fact, higher contribution from key growth areas — Specialty and Connected Care — and sustained dynamics within its generics program are likely to have contributed to the segment’s fiscal first-quarter results.

Notably, for the fiscal first quarter, the Zacks Consensus Estimate for the unit’s revenues stands at $34.75 billion, suggesting an improvement of 3.9% from the year-ago quarter.

Cardinal Health, Inc. Price and EPS Surprise

Cardinal Health, Inc. Price and EPS Surprise

Cardinal Health, Inc. price-eps-surprise | Cardinal Health, Inc. Quote

Also, Cardinal Health’s Medical unit may have contributed significantly to the overall fiscal first-quarter results. In fact, the segment manufactures products such as single-use surgical drapes, gowns and apparel, exam and surgical gloves, which might have benefited sales in the to-be-reported quarter.

Moreover, the company has been committed toward improving efficiencies across its Medical segment by refining commercial, operational and data capabilities. We anticipate these to get reflected in the fiscal first-quarter results.

The company may have gained from its cost savings initiative related to actions intended to optimize and simplify the company's operating model and cost structure. This, in turn, might have aided the company’s margins in the to-be-reported quarter.

Further, the Cardinal Health’s diversified product portfolio is likely to have contributed to the fiscal first-quarter performance.

However, stiff competition in each of the company’s business segments may have weighed on the segment margins and consequently, might impede profitability in the fiscal first quarter.

Here’s What the Quantitative Model Suggests

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is the case here.

Earnings ESP: Cardinal Health has an Earnings ESP of +3.40%. 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 #3.

Other Stocks Worth a Look

Here are some other medical stocks worth considering as these too have the right combination of elements to post an earnings beat this quarter.

Zimmer Biomet Holdings, Inc. (ZBH - Free Report) has an Earnings ESP of +4.10% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Canopy Growth Corporation (CGC - Free Report) has an Earnings ESP of +7.55% and a Zacks Rank of 3.

Orthofix Medical Inc. (OFIX - Free Report) has an Earnings ESP of +42.86% and a Zacks Rank of 3.

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