It has been about a month since the last earnings report for Cardinal Health, Inc. (CAH - Free Report) . Shares have added about 4.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Cardinal Health (CAH - Free Report) Q2 Earnings Beat Estimates, Rise Y/Y
Cardinal Health Inc. (CAH - Free Report) reported second-quarter fiscal 2017 adjusted earnings of $1.34 per share, which beat the Zacks Consensus Estimate of $1.24 and increased 3% on a year-over-year basis.
Revenues increased 5% on a year-over-year basis to $33.1 billion. The figure however came below the Zacks Consensus Estimate of $33.4 billion.
Quarter Details
Pharmaceutical revenues increased 5% to $29.7 billion due to strong growth from existing and net new distribution customers. Strong performance by the Specialty business also drove results.
Medical segment revenues increased 8% to $3.4 billion. Higher contribution from acquisitions and net new and existing customers were primarily responsible for the growth in Medical segment revenues.
Pharmaceutical segment profit in the quarter decreased 14% to $537 million due to generic pharmaceutical pricing and the loss of a large Pharmaceutical Distribution customer. This was partially offset by solid performance by Red Oak Sourcing.
Medical segment profit soared 50% to $159 million due to higher contribution from Cardinal Health Brand products.
Distribution, selling, general and administrative (SG&A) expenses decreased 1% on a year-over-year basis to $910 million in the reported quarter. Net income declined 11% to $633 million from last fiscal year's $709 million.
Financial Condition
Cash and cash equivalents were $1.88 billion as of Dec 31, 2016 compared with $2.36 billion as of Jun 30, 2016. Long-term debt was $4.86 billion as of Dec 31, 2016 compared with the Jun 30, 2016 level of $4.95 billion.
Guidance
Based on fiscal second-quarter results, the company lowered its fiscal 2017 guidance range for adjusted earnings per share from continuing operations to $5.35 to $5.50 from $5.40 to $5.60. The outlook represents growth of approximately 2% to 5% from the prior fiscal year.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been seven revisions lower for the current quarter.
VGM Scores
At this time, Cardinal Health's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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It has been about a month since the last earnings report for Cardinal Health, Inc. (CAH - Free Report) . Shares have added about 4.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Cardinal Health (CAH - Free Report) Q2 Earnings Beat Estimates, Rise Y/Y
Cardinal Health Inc. (CAH - Free Report) reported second-quarter fiscal 2017 adjusted earnings of $1.34 per share, which beat the Zacks Consensus Estimate of $1.24 and increased 3% on a year-over-year basis.
Revenues increased 5% on a year-over-year basis to $33.1 billion. The figure however came below the Zacks Consensus Estimate of $33.4 billion.
Quarter Details
Pharmaceutical revenues increased 5% to $29.7 billion due to strong growth from existing and net new distribution customers. Strong performance by the Specialty business also drove results.
Medical segment revenues increased 8% to $3.4 billion. Higher contribution from acquisitions and net new and existing customers were primarily responsible for the growth in Medical segment revenues.
Pharmaceutical segment profit in the quarter decreased 14% to $537 million due to generic pharmaceutical pricing and the loss of a large Pharmaceutical Distribution customer. This was partially offset by solid performance by Red Oak Sourcing.
Medical segment profit soared 50% to $159 million due to higher contribution from Cardinal Health Brand products.
Distribution, selling, general and administrative (SG&A) expenses decreased 1% on a year-over-year basis to $910 million in the reported quarter. Net income declined 11% to $633 million from last fiscal year's $709 million.
Financial Condition
Cash and cash equivalents were $1.88 billion as of Dec 31, 2016 compared with $2.36 billion as of Jun 30, 2016. Long-term debt was $4.86 billion as of Dec 31, 2016 compared with the Jun 30, 2016 level of $4.95 billion.
Guidance
Based on fiscal second-quarter results, the company lowered its fiscal 2017 guidance range for adjusted earnings per share from continuing operations to $5.35 to $5.50 from $5.40 to $5.60. The outlook represents growth of approximately 2% to 5% from the prior fiscal year.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been seven revisions lower for the current quarter.
VGM Scores
At this time, Cardinal Health's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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