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Cardinal Health: Set to Beat - Analyst Blog
2/4/2013 4:44:00 PM
We expect Cardinal Health ( CAH ) to beat expectations when it reports fiscal second quarter 2013 results on Feb 5.
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 ingredients.
Positive Zacks ESP: Earnings Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method ), which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is at +1.2%. This is a meaningful and leading indicator of a likely positive earnings surprise for shares.
Zacks Rank #3 (Hold): Note that stocks with Zacks Ranks of #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 #3 (Hold) and Earnings ESP of +1.2% makes us confident of a positive earnings beat this coming announcement.
What is Driving the Better than Expected Earnings?
The company stands to gain from the gradual shift in mix from bulk to the higher-margin non-bulk sector of the Pharmaceutical segment. It is also riding the generic wave. Overall, Cardinal benefits from a spate of tuck-in acquisitions and capital deployment strategies. The positive trend is seen in the trailing four-quarter average surprise of 4.3%.
Other Stocks to Consider
Cardinal Health is not the only stock looking up this earnings season. We also see likely earnings beats coming from these three players.
ResMed ( RMD ) has earnings ESP of +3.6% and Zacks Rank #1 (Strong Buy).
Cyberonics ( CYBX ) has earnings ESP of +2.6% and Zacks Rank #1 (Strong Buy).
Becton, Dickinson and Company ( BDX ) has earnings ESP of +3.3% and Zacks Rank #2 (Buy).
BECTON DICKINSO (BDX): Free Stock Analysis Report
CARDINAL HEALTH (CAH): Free Stock Analysis Report
CYBERONICS INC (CYBX): Free Stock Analysis Report
RESMED INC (RMD): Free Stock Analysis Report
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