A month has gone by since the last earnings report for Cardinal Health (CAH Quick QuoteCAH - Free Report) . Shares have added about 7.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cardinal 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 Q1 Earnings and Revenues Beat Estimates

Cardinal Health, Inc. reported first-quarter fiscal 2021 adjusted earnings of $1.51 per share, which surpassed the Zacks Consensus Estimate of $1.14 by 32.5%. The bottom line also improved 18.9% year over year.

Revenue Details

Revenues increased 4.6% on a year-over-year basis to $39.07 billion. The top line also beat the Zacks Consensus Estimate by 1.7%.

Segmental Analysis

Pharmaceutical Segment

In the fiscal first quarter, pharmaceutical revenues rose 5% to $35.11 billion on a year-over-year basis. The upside can be attributed to growth in sales from Pharmaceutical Distribution and Specialty Solutions customers.

Pharmaceutical witnessed an increase of 1% in profits to $402 million driven by increase in contribution from brand sales mix. However, decline in volume related to COVID-19 weighed on the segment’s profit.

Medical Segment

In the quarter under review, revenues at this segment increased 1% to $3.96 billion attributable to higher sales from Cardinal Health at Home.

Medical segment profit improved 35.3% to $230 million courtesy of benefits from cost savings, which include global manufacturing efficiencies.

Margin Analysis

Gross profit rose 2.1% year over year to $1.72 billion.

As a percentage of revenues, gross margin in the reported quarter was 4.4%, down 10 basis points (bps) on a year-over-year basis.

Distribution, selling, general and administrative expenses totaled $1.14 billion, up 2.7% year over year.

The company reported operating loss of $624 million in the quarter under review, significantly narrower than the year-ago quarter’s loss of $5.26 billion.

Financial Update

The company exited the quarter with cash and cash equivalents of $2.75 billion, compared with $2.77 billion on a sequential basis.

Net cash from operating activities totaled $270 million at end of the fiscal first quarter, against ($653) million in the year-ago quarter.

2021 Guidance Raised

The company anticipates adjusted earnings per share between $5.65 and $5.95 (up from the previously guided range of $5.25-$5.65). The Zacks Consensus Estimate is pegged at $5.46 per share. The raised fiscal 2021 EPS outlook takes into account a lower than previously anticipated net headwind associated with the COVID-19 pandemic and better cost savings.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

At this time, Cardinal has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Cardinal has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.