It has been about a month since the last earnings report for Cencora (COR Quick QuoteCOR - Free Report) . Shares have added about 3.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cencora 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.

COR Q1 Earnings & Revenue Beat Estimates, Margins Decline Y/Y

Cencora reported first-quarter fiscal 2025 adjusted earnings per share of $3.73, which beat the Zacks Consensus Estimate of $3.50 by 6.6%. The bottom line also improved 13.7% year over year.

GAAP earnings per share was $2.50, down 16.1% from the year-ago period’s level.

The decline in GAAP earnings per share has likely resulted from the absence of a credit of $78.9 million related to litigation and opioid-related expenses recorded in the year-ago quarter.

Revenue Details

Revenues totaled $81.49 billion, up 12.8% year over year. The top line beat the Zacks Consensus Estimate by 4.3%.

Segmental Analysis

U.S. Healthcare Solutions

Revenues in this segment totaled $74 billion, up 13.6% on a year-over-year basis. This improvement was driven by overall market growth on increased unit volume, including increased sales of GLP-1 drugs and specialty products.

Segmental operating income totaled $767.3 million, up 9.9% year over year. Higher gross profit (including fees earned from distributing government-owned COVID-19 treatments and gross profit on sales to specialty physician practices) contributed to the upside, partly offset by increased operating expenses.

International Healthcare Solutions

This segment includes Alliance Healthcare, World Courier, Innomar and Profarma Specialty.

Revenues amounted to $7.5 billion, up 5.5% year over year. The top line increased 8.5% at constant currency (cc).

Operating income totaled $182.1 million, down 2.9% on a reported basis but up 3.3% at cc. The reported decline was due to lower operating income at COR’s global specialty logistics business, partially offset by an increase in its European distribution business.

Margin Analysis

Cencora reported an adjusted gross profit of $2.5 billion, up 6.1% on a year-over-year basis. As a percentage of revenues, the adjusted gross margin was 3.1%, down 20 basis points (bps) year over year.

The company recorded an adjusted operating income of $949.3 million, up 7.2% year over year. As a percentage of revenues, the adjusted operating margin was 1.2%, which contracted 7 bps from the year-ago quarter’s level.

Financial Update

COR exited the fiscal first quarter with cash and cash equivalents worth $3.22 billion compared with $3.13 billion in the previous quarter.

Cumulative net cash used in operating activities totaled $2.72 billion against $885.2 million in net cash provided by operating activities a year ago.

Dividend Update

Cencora's board of directors declared a quarterly dividend of 55 cents per share. The new dividend is payable on March 03, 2025, to shareholders of record at the close of business on Feb. 14, 2025.

FY25 Guidance

The company issued an updated outlook for fiscal 2025 earnings and revenues, primarily to include the impact of COR’s acquisition of RCA, a leading management services organization of retina specialists, completed last month.

Adjusted earnings per share is estimated to be in the $15.15-$15.45 range, indicating growth of 8-10% from the prior-year reported level. The guidance was also up from the previous projection of 14.80-$15.10. The Zacks Consensus Estimate for the same is pegged at $15.14.

Revenues are now projected to rise 8-10% for fiscal 2025 compared with the earlier guided range of 7-9%. The top line at the U.S. Healthcare Solutions segment and the International Healthcare solutions business is estimated to increase 9-11% and 4-5%, respectively. The previous guidance anticipated sales at both segments to grow 7-9%.

Adjusted operating income is expected to improve 11.5-13.5% for fiscal 2025, up from the earlier guidance of 5-6.5%.

Operating income for the U.S. Healthcare Solutions segment is now expected to improve 11.5-13.5% (previously 5-6.5%) while the same for International Healthcare solutions business is estimated to remain flat ((previously 5-6.5%)) but grow approximately 5% at cc.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Cencora has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cencora has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Cencora is part of the Zacks Medical Services industry. Over the past month, Danaher (DHR Quick QuoteDHR - Free Report) , a stock from the same industry, has gained 2.3%. The company reported its results for the quarter ended December 2024 more than a month ago.

Danaher reported revenues of $6.54 billion in the last reported quarter, representing a year-over-year change of +2.1%. EPS of $2.14 for the same period compares with $2.09 a year ago.

For the current quarter, Danaher is expected to post earnings of $1.62 per share, indicating a change of -15.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.5% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Danaher. Also, the stock has a VGM Score of F.