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Cardinal Health (CAH) Q2 Earnings: What's in the Cards?
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Dublin, OH-based Cardinal Health (CAH - Free Report) , a global player in the healthcare services and products space, is set to report second-quarter fiscal 2017 results on Feb 7, before the bell.
Last quarter, the company posted earnings of $1.24 per share, which surpassed the Zacks Consensus Estimate of $1.21 but decreased 10% on a year-over-year basis.
Notably, on an average, Cardinal Health beat the Zacks Consensus Estimate by almost 3.7% over the last four quarters.
Stock Performance
A glimpse at the price performance of the stock over the past three months reveals a modest return of almost 9.4%.
This compares favorably with the Zacks classified Medical/Dental Supplies sub-industry’s gain of around 6.8%. The stock’s current return also compares favorably with the S&P 500’s return of 8.3% over the same time.
In fact, with a long-term expected earnings growth rate of 9.57%, the stock has solid potential for further appreciation.
Let’s see how things are shaping up prior to this quarter.
Factors at Play
Cardinal Health is banking on acquisitions, strategic buyouts, joint ventures and supply agreements to drive growth. Furthermore, the aging population presents significant growth opportunity for the company. On the flip side, Cardinal Health expects generic sales to remain sluggish in the near term. Further, generic pricing pressure remains a concern.
The company recently announced the signing of a definitive asset purchase agreement with Navidea Biopharmaceuticals. Per the deal, Cardinal Health will purchase Navidea's Lymphoseek product for lymphatic mapping, lymph node biopsy and the diagnosis of metastatic spread to lymph nodes for the staging of cancer in North America. The proposed deal has been approved by the boards of the companies. The transaction is expected to close by the first half of 2017 (read more: Cardinal Health to Acquire Lymphoseek Rights for $80 Million).
We are also upbeat on Cardinal Health’s recent expansion plans in Asia. The company continues to believe that China presents significant growth opportunities. Furthermore, growth in new and existing customer count is likely to boost earnings.
Estimate Revision Trend
Meanwhile, the company has seen a mixed trend with respect to earnings estimates. The current quarter has seen one upward and one downward estimate revision in the past 30 days. Meanwhile, for the full year, one estimate moved higher while one moved lower over the same timeframe.
This had a nominal impact on the consensus estimate though as the consensus estimate for the current quarter remained stable over the past months, while the full-year estimate inched up roughly 0.2%.
Earnings Whispers
Despite a streak of positive developments, our quantitative model doesn’t conclusively point to an earnings beat this quarter.
That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP for Cardinal Health is -0.81%. This is because the Most Accurate estimate stands at $1.23 while the Zacks Consensus Estimate is pegged at $1.24. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cardinal Health carries a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision.
Stocks to Consider
Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
DaVita HealthCare Partners Inc. (DVA - Free Report) has an Earnings ESP of +4.40% and a Zacks Rank #3. Additionally, on an average, the stock represented a positive surprise of almost 3.77% in the last four trailing quarters.
Envision Healthcare Corporation has an Earnings ESP of +2.50% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here. The stock posted a positive earnings surprise of 1.92% in the last reported quarter.
HCA Holdings, Inc. (HCA - Free Report) has an Earnings ESP of +1.12% and a Zacks Rank #3. The stock posted an earnings beat in the last four trailing quarters, the average being 14.01%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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Cardinal Health (CAH) Q2 Earnings: What's in the Cards?
Dublin, OH-based Cardinal Health (CAH - Free Report) , a global player in the healthcare services and products space, is set to report second-quarter fiscal 2017 results on Feb 7, before the bell.
Last quarter, the company posted earnings of $1.24 per share, which surpassed the Zacks Consensus Estimate of $1.21 but decreased 10% on a year-over-year basis.
Notably, on an average, Cardinal Health beat the Zacks Consensus Estimate by almost 3.7% over the last four quarters.
Stock Performance
A glimpse at the price performance of the stock over the past three months reveals a modest return of almost 9.4%.
This compares favorably with the Zacks classified Medical/Dental Supplies sub-industry’s gain of around 6.8%. The stock’s current return also compares favorably with the S&P 500’s return of 8.3% over the same time.
In fact, with a long-term expected earnings growth rate of 9.57%, the stock has solid potential for further appreciation.
Let’s see how things are shaping up prior to this quarter.
Factors at Play
Cardinal Health is banking on acquisitions, strategic buyouts, joint ventures and supply agreements to drive growth. Furthermore, the aging population presents significant growth opportunity for the company. On the flip side, Cardinal Health expects generic sales to remain sluggish in the near term. Further, generic pricing pressure remains a concern.
The company recently announced the signing of a definitive asset purchase agreement with Navidea Biopharmaceuticals. Per the deal, Cardinal Health will purchase Navidea's Lymphoseek product for lymphatic mapping, lymph node biopsy and the diagnosis of metastatic spread to lymph nodes for the staging of cancer in North America. The proposed deal has been approved by the boards of the companies. The transaction is expected to close by the first half of 2017 (read more: Cardinal Health to Acquire Lymphoseek Rights for $80 Million).
Cardinal Health, Inc. Price and EPS Surprise
Cardinal Health, Inc. Price and EPS Surprise | Cardinal Health, Inc. Quote
We are also upbeat on Cardinal Health’s recent expansion plans in Asia. The company continues to believe that China presents significant growth opportunities. Furthermore, growth in new and existing customer count is likely to boost earnings.
Estimate Revision Trend
Meanwhile, the company has seen a mixed trend with respect to earnings estimates. The current quarter has seen one upward and one downward estimate revision in the past 30 days. Meanwhile, for the full year, one estimate moved higher while one moved lower over the same timeframe.
This had a nominal impact on the consensus estimate though as the consensus estimate for the current quarter remained stable over the past months, while the full-year estimate inched up roughly 0.2%.
Earnings Whispers
Despite a streak of positive developments, our quantitative model doesn’t conclusively point to an earnings beat this quarter.
That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP for Cardinal Health is -0.81%. This is because the Most Accurate estimate stands at $1.23 while the Zacks Consensus Estimate is pegged at $1.24. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cardinal Health carries a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision.
Stocks to Consider
Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
DaVita HealthCare Partners Inc. (DVA - Free Report) has an Earnings ESP of +4.40% and a Zacks Rank #3. Additionally, on an average, the stock represented a positive surprise of almost 3.77% in the last four trailing quarters.
Envision Healthcare Corporation has an Earnings ESP of +2.50% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here. The stock posted a positive earnings surprise of 1.92% in the last reported quarter.
HCA Holdings, Inc. (HCA - Free Report) has an Earnings ESP of +1.12% and a Zacks Rank #3. The stock posted an earnings beat in the last four trailing quarters, the average being 14.01%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>