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Cardinal (CAH) Down 2.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Cardinal Health (CAH - Free Report) . Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Cardinal due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Cardinal Health Beats on Q4 Earnings, Ups '24 EPS View
Cardinal Health reported fiscal fourth-quarter 2023 adjusted earnings of $1.55 per share (EPS), beating the Zacks Consensus Estimate of $1.48 by 4.7%. The bottom line also improved 48% year over year.
GAAP loss per share in the quarter was 25 cents against the year-ago quarter’s earnings per share of 50 cents per share. The significant decline in GAAP earnings was led by a goodwill impairment charge of $368 million in the Medical segment.
Revenue Details
Sales improved 13% on a year-over-year basis to $53.5 billion. The top line also outpaced the Zacks Consensus Estimate by 2%.
Segmental Analysis
Pharmaceutical Segment
In the reported quarter, pharmaceutical revenues increased 15% to $49.7 billion on a year-over-year basis. The performance highlights branded pharmaceutical sales growth from existing Pharmaceutical Distribution and Specialty Solutions customers.
Pharmaceutical profit totaled $504 million, up 12% from the year-ago quarter’s level. The upside was driven by generics program performance.
Medical Segment
Revenues in this segment were $3.8 billion, flat year over year, as lower PPE volumes and pricing were completely offset by at-home Solutions growth.
The segment reported a profit of $82 million against a loss of $16 million in the year-ago quarter. This upside was driven by an improvement in net inflationary impacts, including mitigation initiatives and normalization of PPE margins.
Margin Analysis
Gross profit increased 13% year over year to $1.83 billion.
As a percentage of revenues, the gross margin in the reported quarter was 3.5%, almost flat on a year-over-year basis.
Distribution, selling, general and administrative expenses totaled $1.27 billion, up 9.7% from that recorded in the comparable period of 2022.
Operating income came in at $137 million compared with the year-ago quarter’s operating income of $36 million.
Fiscal 2023 Results
For the full year, Cardinal Health’s revenues were up 13% at $205 billion. Adjusted EPS improved 14% to $5.79.
Financial Update
The company exited the reported quarter with cash and cash equivalents of $4.04 billion compared with $3.99 billion in the fiscal third quarter of 2023.
Cumulative net cash provided by operating activities totaled $858 million compared with $2.99 billion in the year-ago period.
2024 Guidance Raised
Cardinal Health raised its fiscal 2024 guidance for earnings. The company anticipates adjusted EPS between $6.50 and $6.75, up from the previous guidance of $6.45-$6.70. The Zacks Consensus Estimate for the same is pegged at $5.73 per share.
CAH also raised its Pharmaceutical segment revenue guidance for fiscal 2024. The company expects revenues to grow by 10-12 %. It reiterated the Pharmaceutical segment’s profit outlook at 4-6% growth.
The company expects Medical segment sales to grow by nearly 3% and segment profit of almost $400 million.
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 a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Cardinal has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Cardinal (CAH) Down 2.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Cardinal Health (CAH - Free Report) . Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Cardinal due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Cardinal Health Beats on Q4 Earnings, Ups '24 EPS View
Cardinal Health reported fiscal fourth-quarter 2023 adjusted earnings of $1.55 per share (EPS), beating the Zacks Consensus Estimate of $1.48 by 4.7%. The bottom line also improved 48% year over year.
GAAP loss per share in the quarter was 25 cents against the year-ago quarter’s earnings per share of 50 cents per share. The significant decline in GAAP earnings was led by a goodwill impairment charge of $368 million in the Medical segment.
Revenue Details
Sales improved 13% on a year-over-year basis to $53.5 billion. The top line also outpaced the Zacks Consensus Estimate by 2%.
Segmental Analysis
Pharmaceutical Segment
In the reported quarter, pharmaceutical revenues increased 15% to $49.7 billion on a year-over-year basis. The performance highlights branded pharmaceutical sales growth from existing Pharmaceutical Distribution and Specialty Solutions customers.
Pharmaceutical profit totaled $504 million, up 12% from the year-ago quarter’s level. The upside was driven by generics program performance.
Medical Segment
Revenues in this segment were $3.8 billion, flat year over year, as lower PPE volumes and pricing were completely offset by at-home Solutions growth.
The segment reported a profit of $82 million against a loss of $16 million in the year-ago quarter. This upside was driven by an improvement in net inflationary impacts, including mitigation initiatives and normalization of PPE margins.
Margin Analysis
Gross profit increased 13% year over year to $1.83 billion.
As a percentage of revenues, the gross margin in the reported quarter was 3.5%, almost flat on a year-over-year basis.
Distribution, selling, general and administrative expenses totaled $1.27 billion, up 9.7% from that recorded in the comparable period of 2022.
Operating income came in at $137 million compared with the year-ago quarter’s operating income of $36 million.
Fiscal 2023 Results
For the full year, Cardinal Health’s revenues were up 13% at $205 billion. Adjusted EPS improved 14% to $5.79.
Financial Update
The company exited the reported quarter with cash and cash equivalents of $4.04 billion compared with $3.99 billion in the fiscal third quarter of 2023.
Cumulative net cash provided by operating activities totaled $858 million compared with $2.99 billion in the year-ago period.
2024 Guidance Raised
Cardinal Health raised its fiscal 2024 guidance for earnings. The company anticipates adjusted EPS between $6.50 and $6.75, up from the previous guidance of $6.45-$6.70. The Zacks Consensus Estimate for the same is pegged at $5.73 per share.
CAH also raised its Pharmaceutical segment revenue guidance for fiscal 2024. The company expects revenues to grow by 10-12 %. It reiterated the Pharmaceutical segment’s profit outlook at 4-6% growth.
The company expects Medical segment sales to grow by nearly 3% and segment profit of almost $400 million.
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 a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Cardinal has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.