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Cardinal Health (CAH) to Report Q3 Earnings: What's in Store?

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Cardinal Health, Inc. (CAH - Free Report) is scheduled to report third-quarter fiscal 2020 results on May 11, before the opening bell.

In the last reported quarter, the company delivered a positive earnings surprise of 25.6%. Its earnings surpassed estimates in each of the trailing four quarters, the average beat being 18.2%.

Q3 Estimates

For the fiscal third quarter, the Zacks Consensus Estimate for earnings is pegged at $1.43 per share, indicating a decline 10.1% from the year-ago quarter. The same for revenues stands at $36.90 billion, suggesting growth of 4.7% from the year-ago reported figure.

Pharmaceutical Holds Key

Cardinal Health’s Pharmaceutical segment is the second largest pharmaceutical distributor in the United States. Sales growth from pharmaceutical distribution and specialty solutions customers is anticipated to get reflected in the Pharmaceutical segment’s third-quarter fiscal performance.

Cardinal Health Inc Price and EPS Surprise

 

Cardinal Health Inc Price and EPS Surprise

Cardinal Health Inc price-eps-surprise | Cardinal Health Inc Quote

Notably, for the fiscal third-quarter, the Zacks Consensus Estimate for the unit’s revenues stands at $33.18 billion, suggesting growth of 5.7% from the year-ago quarter.

Moreover, positive impact from Specialty Solutions, higher contribution from brand sales and mix, and benefit derived from the cost savings initiatives might have contributed to the segment’s profits.

Other Factors to Note

Cardinal Health’s Medical unit may have contributed significantly to the overall fiscal third-quarter performance. In fact, the segment manufactures products such as single-use surgical drapes, gowns and apparel, exam and surgical gloves, which are likely to have benefited sales in the to-be-reported quarter. The fiscal third-quarter performance is likely to reflect growth in Cardinal Health at Home.

Moreover, the company has been committed toward improving efficiencies across its Medical segment by refining commercial, operational and data capabilities. We anticipate these to reflect on the fiscal third-quarter results.

The company is likely to have benefited from its cost savings initiative related to actions intended to optimize and simplify the company's operating model and cost structure. This, in turn, might have aided the company’s margins in the to-be-reported quarter.

Further, the Cardinal Health’s diversified product portfolio is likely to have contributed to the company’s overall fiscal third-quarter performance.

The company’s Specialty business may have exhibited solid performance in the to-be-reported quarter on the back of higher volumes and mix.

However, stiff competition in each of the company’s business segments is likely to have weighed on the segment margins and consequently, might impede profitability in the fiscal third quarter.

Here’s What the Quantitative Model Suggests

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

Earnings ESP: Cardinal Health has an Earnings ESP of -1.14%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #2.

Stocks Worth a Look

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.

Eagle Pharmaceuticals, Inc. (EGRX - Free Report) has an Earnings ESP of +17.02% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Envista Holdings Corporation (NVST - Free Report) has an Earnings ESP of +39.39% and a Zacks Rank of 3.

Aurora Cannabis Inc. (ACB - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank of 3.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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