A month has gone by since the last earnings report for Cardinal Health (CAH Quick QuoteCAH - Free Report) . Shares have added about 15.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is 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 the most recent earnings report in order to get a better handle on the important drivers.

Cardinal Health Beats Q3 Earnings and Revenue Estimates

Cardinal Health, Inc.reported third-quarter fiscal 2020 adjusted earnings of $1.62 per share, which surpassed the Zacks Consensus Estimate of $1.43 by 13.3%. Further, the bottom linerose 1.9% year over year.

Revenues improved 11.2% on a year-over-year basis to $39.16 billion. The top line also beat the Zacks Consensus Estimate by 5.8%.

Segmental Analysis

Pharmaceutical Segment

In the fiscal third quarter, pharmaceutical revenues improved 11.9% to $35.11 billion on a year-over-year basis. The upside can be attributed to sales growth from Pharmaceutical Distribution and Specialty Solutions customers.

Pharmaceutical witnessed a decline of 0.4% in profits to $534 million. An adverse impact of Pharmaceutical Distribution customer contract renewals weighed on the performance.

Medical Segment

In the quarter under review, revenues at this segment rose 4.6% to $4.05 billion on account of growth in Cardinal Health at Home, and products and distribution.

Medical segment profit improved 14.8% to $178 million driven byincrease in products and distribution, which included benefits from cost savings initiatives and global manufacturing.

Margin Analysis

Gross profit improved 6.9% year over year to $1.89 billion.

As a percentage of revenues, gross margin in the reported quarter was 4.8%, down 20 basis points (bps) on a year-over-year basis.

Distribution, selling, general and administrative expenses totaled $1.17 billion, up 6.2% year over year.

The company reported operating income of $562 million in the quarter under review, up 30.1% from the year-ago quarter. As a percentage of revenues, operating margin in the reported quarter was 1.4%, up 20 bps on a year-over-year basis.

Financial Update

The company exited the quarter with cash and cash equivalents of $2.33 billion, up 7.9% sequentially.

Cumulative cash from operating activities totaled $1.68 billion at end of the fiscal third quarter, compared with $1.48 billion in the year-ago quarter.

2020 Guidance Reiterated

The company has reaffirmed fiscal 2020 adjusted earnings per share, which ranges between $5.20 and $5.40. The Zacks Consensus Estimate is pegged at $5.19 per share.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, Cardinal has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cardinal has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.