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Cardinal Health (CAH) Q1 Earnings: Disappointment in Store?
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Cardinal Health Inc. (CAH - Free Report) is set to report first-quarter fiscal 2017 earnings results on Oct 31. Last quarter, the company reported earnings of $1.14 per share, which beat the Zacks Consensus Estimate by a penny.
Notably, Cardinal Health posted a positive earnings surprise of 9.46% on average over the last four quarters.
Let’s see how things are shaping up for this announcement.
Factors at Play
Cardinal Health is banking on acquisitions, strategic buyouts, joint ventures and supply agreements to drive growth. The aging population presents significant growth opportunity for the company.
However, Cardinal Health anticipates generic sales to remain sluggish in the near term. Further, generic pricing pressure remains a concern. We believe the Red Oak sourcing venture with CVS Health will help Cardinal Health to fend off this headwind.
Meanwhile, the company’s growing product volumes in the nuclear pharmacy business is a positive. Additionally, Cardinal Health’s focus on participating in the manufacture and distribution of new therapeutic radio biopharmaceuticals is expected to diversify revenues.
Moreover, synergies from the acquisitions of Metro Medical, The Harvard Drug Group and Cordis are key catalysts. Strong growth in China is also expected to drive Cardinal Health’s top-line growth.
Overall, the company’s activities during the July–September period were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the first quarter of fiscal 2017 declined to $1.21 from $1.41 per share over the last 90 days.
Our proven model does not conclusively show that Cardinal Health is likely to beat on earnings 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 Most Accurate estimate of $1.19 for Cardinal Health is lower than the Zacks Consensus Estimate of $1.21. Hence, the company Health has an Earnings ESP of -1.65%. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Cardinal Health carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Ariad Pharmaceuticals Inc. , with an Earnings ESP of +5.26% and a Zacks Rank #1. Additionally, the stock represents a stellar one-year return of 37.4%.
Glaukos Corporation (GKOS - Free Report) has an earnings ESP of +200.00% and a Zacks Rank #1. The company represents an impressive one-year return of almost 62.3%.
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Cardinal Health (CAH) Q1 Earnings: Disappointment in Store?
Cardinal Health Inc. (CAH - Free Report) is set to report first-quarter fiscal 2017 earnings results on Oct 31. Last quarter, the company reported earnings of $1.14 per share, which beat the Zacks Consensus Estimate by a penny.
Notably, Cardinal Health posted a positive earnings surprise of 9.46% on average over the last four quarters.
Let’s see how things are shaping up for this announcement.
Factors at Play
Cardinal Health is banking on acquisitions, strategic buyouts, joint ventures and supply agreements to drive growth. The aging population presents significant growth opportunity for the company.
However, Cardinal Health anticipates generic sales to remain sluggish in the near term. Further, generic pricing pressure remains a concern. We believe the Red Oak sourcing venture with CVS Health will help Cardinal Health to fend off this headwind.
Meanwhile, the company’s growing product volumes in the nuclear pharmacy business is a positive. Additionally, Cardinal Health’s focus on participating in the manufacture and distribution of new therapeutic radio biopharmaceuticals is expected to diversify revenues.
Moreover, synergies from the acquisitions of Metro Medical, The Harvard Drug Group and Cordis are key catalysts. Strong growth in China is also expected to drive Cardinal Health’s top-line growth.
Overall, the company’s activities during the July–September period were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the first quarter of fiscal 2017 declined to $1.21 from $1.41 per share over the last 90 days.
CARDINAL HEALTH Price and EPS Surprise
CARDINAL HEALTH Price and EPS Surprise | CARDINAL HEALTH Quote
Earnings Whispers
Our proven model does not conclusively show that Cardinal Health is likely to beat on earnings 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 Most Accurate estimate of $1.19 for Cardinal Health is lower than the Zacks Consensus Estimate of $1.21. Hence, the company Health has an Earnings ESP of -1.65%. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Cardinal Health carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Ariad Pharmaceuticals Inc. , with an Earnings ESP of +5.26% and a Zacks Rank #1. Additionally, the stock represents a stellar one-year return of 37.4%.
Exelixis Inc. (EXEL - Free Report) , has a stupendous one-year return of 95.2%. It has an earnings ESP of +7.69% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Glaukos Corporation (GKOS - Free Report) has an earnings ESP of +200.00% and a Zacks Rank #1. The company represents an impressive one-year return of almost 62.3%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>