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Bull of the Day: Cardinal Health (CAH)

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Cardinal Health Inc. (CAH - Free Report) is a national pharmaceutical drug distributor—the second largest in the U.S.—and offers services to pharmacies and healthcare providers and manufacturers.

Q2 Earnings Impress Investors

Cardinal reported strong fiscal 2020 second quarter results back in February, with its top and bottom line beating the Zacks Consensus Estimate.

Total revenue jumped 5% to $39.7 billion, and earnings came to $1.52 per share. Earnings were significantly boosted thanks to the company’s generic pharmaceuticals portfolio performance.

Cardinal’s two business segments, Pharmaceutical and Medical, generated revenue of $35.7 billion and $4 billion, respectively.

Investors were pleased with the results, and CAH stock surged 11% the day of the earnings release.

Management also raised its full-year 2020 adjusted EPS guidance to a midpoint of $5.30 per share, up from the previous midpoint of $4.97.

Valuation & Solid Dividend


Cardinal Health, Inc. Price and Consensus


Shares of CAH are basically flat over the past three months compared to the S&P 500’s drop of 12.3%. Earnings estimates have been rising, and Cardinal Health is a Zacks Rank #1 (Strong Buy) right now.

For the current fiscal year, two analysts have revised their bottom line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up five cents to $5.38 per share; earnings are expected to increase 2% compared to the prior year period. 2021 looks strong as well, with earnings expected to see 4.2% year-over-year growth.

Like other healthcare stocks, CAH is now on many investors’ radar because of its medical equipment supply segment. The company serves as a personal protection equipment (PPE) supplier to hospitals nationwide, and as long as the COVID-19 pandemic persists, demand for these products will remain high.

CAH also offers potential investors value. It only trades at a 9X forward multiple, well below its peers (22X) and the broader market (16X).

And, CAH boasts a nearly 4% dividend yield and holds the title of Dividend Aristocrat, having increased its shareholder payout for more than 30 consecutive years.

If you’re an investor searching for a healthcare stock to add to your portfolio, make sure to keep CAH on your shortlist.

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