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Bull of the Day: Cardinal Health (CAH)

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Cardinal Health (CAH - Free Report) is a nationwide drug distributor and provider of services to pharmacies, healthcare providers, and manufacturers. Analysts have taken a bullish stance on the company’s earnings outlook, landing it into the highly-favorable Zacks Rank #1 (Strong Buy).

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In addition to favorable earnings estimate revisions, the company resides within the Zacks Medical – Dental Supplies industry, currently ranked in the top 30% of all Zacks industries. Let’s take a deeper look at the company.

Cardinal Health

CAH shares have been notably strong over the last year, adding +54% and widely outperforming relative to the S&P 500. Better-than-expected quarterly results have helped drive the bullish move, with Cardinal Health exceeding our consensus EPS estimates by an average of 15% across its last four releases.

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Concerning headline figures in its latest print, CAH posted a 17% beat relative to the Zacks Consensus EPS estimate and reported sales 1.1% above expectations, reflecting growth rates of 38% and 11.6%, respectively.

Results have been driven by increased profitability across both its segments, with the company’s operational execution providing positive tailwinds. CAH has consistently grown sales over the years, as we can see illustrated below. 

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Image Source: Zacks Investment Research

In addition to earnings momentum, investors stand to reap a passive income, with CAH shares yielding 1.8% annually. The company is a member of the elite Dividend Aristocrats group, whose commitment to shareholders is unmatched.

Shares aren’t overly stretched regarding valuation, underpinned by its Style Score of ‘A’ for Value. Shares presently trade at a 14.4X forward 12-month earnings multiple, above the five-year median but comparing favorably to its respective Zacks industry average.

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Image Source: Zacks Investment Research

The company’s growth profile is considerably bright for being non-technology, with consensus estimates for its current year suggesting +25% earnings growth on +11% higher sales, with FY25 expectations suggesting an additional +10% of earnings growth paired with a +9% sales bump.

The stock carries a Style Score of ‘B’ for Growth.  

Bottom Line

Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.

The top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.

Cardinal Health (CAH - Free Report) would be an excellent stock for investors to consider, as displayed by its Zack Rank #1 (Strong Buy).

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