We expect healthcare services provider
Cardinal Health, Inc.
) to beat expectations when it reports third-quarter fiscal 2014
financial results on May 1.
Why a Likely Positive Surprise?
Our proven model shows that Cardinal Health is likely to beat
earnings because it has the right combination of two key
: Expected Surprise Prediction or
represents the difference between the Most Accurate estimate and
the Zacks Consensus Estimate. Cardinal Health has a Zacks ESP of
+1.00%. This is very meaningful and a leading indicator of a
likely positive earnings surprise for shares.
: Cardinal Health carries a Zacks Rank #2 (Buy). Note that stocks
with Zacks Ranks #1, 2 and 3 have a significantly higher chance
of beating earnings. The Sell-rated stocks (#4 and 5) should
never be considered going into an earnings announcement.
The combination of Cardinal Health's Zacks Rank #2 (Buy) and
+1.00% ESP makes us confident of a possible positive earnings
beat on May 1. Cardinal Health delivered positive surprises in
all of its last 4 quarters, with an average beat of 16.69%
What is Driving the Better-than-Expected
In its second-quarter fiscal 2014, Cardinal Health reported
adjusted earnings of 90 cents per share, beating the Zacks
Consensus Estimate by 8.4%. However, earnings in the quarter
dropped 3.2% from the year-ago quarter equivalent.
In the last reported quarter, Cardinal Health delivered a solid
operating performance, with a 10.3% hike in adjusted operating
earnings, which amounted to $579 million in the quarter. The
company's formation of a generic sourcing joint venture with CVS
Caremark reflects the fact that Cardinal Health's businesses are
constantly adapting a dynamic health care environment, thereby
strengthening the long-term growth prospect of the company's
Cardinal Health's Pharmaceutical segment delivered impressive
profit growth of 9.3%, despite a revenue shortfall of 14.5%,
driven by strong performance from both generic programs and
branded agreements, including the impact of price inflation. The
company's other segment Medical also delivered solid earnings
growth of 39.4%, owing to growth in Home Health resulting from
the AssuraMed acquisition.
Based on its solid performance in the past quarter, Cardinal
Health increased 2014 adjusted earnings guidance to $3.75-$3.85
per share from the prior range of $3.62 to $3.72 per share,
reflecting a year-over-year rise of approximately 0.5-3.2%.
Other Stocks to Consider
Stryker is not the only firm looking up this earnings season.
We also see likely earnings beats coming from these 3 industry
Myriad Genetics Inc
), earnings ESP of +10.87% and a Zacks Rank #1 (Strong Buy).
), earnings ESP of +50.00% and a Zacks Rank #2 (Buy).
Edwards Lifesciences Corp.
), earnings ESP of +1.47% and a Zacks Rank #2 (Buy).
AFFYMETRIX INC (AFFX): Free Stock Analysis
CARDINAL HEALTH (CAH): Free Stock Analysis
EDWARDS LIFESCI (EW): Free Stock Analysis
MYRIAD GENETICS (MYGN): Free Stock Analysis
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