Cardinal (CAH) Up 2.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Cardinal Health (CAH). Shares have added about 2.5% 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? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Cardinal Health, Inc. before we dive into how investors and analysts have reacted as of late.
CAH Q4 Earnings Beat on Pharma Strength, Revenues Miss
Cardinal Health reported fourth-quarter fiscal 2026 adjusted earnings per share of $2.91, beating the Zacks Consensus Estimate by 20.3%. The bottom line improved 40% year over year, aided by higher operating earnings, IEEPA tariff refunds, a lower tax rate and a reduced share count.
GAAP earnings per share in the quarter was $1.70 compared with $1.00 in the year-ago period.
Full-year fiscal 2026 adjusted EPS was $11.26, up 37% compared to the figure at the end of the fiscal 2025 period. The company reported GAAP EPS of $7.23 in fiscal 2026, compared with $6.45 in the year-ago period.
Q4 Revenue Details
For the fiscal fourth quarter, revenues were up 6% on a year-over-year basis to $63.67 billion. The top line, however, missed the Zacks Consensus Estimate by 2.9%.
For full-year fiscal 2026, CAH registered revenues of $254.25 billion, up 14% compared with fiscal 2025.
Segmental Analysis of CAH
Pharmaceutical and Specialty Solutions
Pharmaceutical and Specialty Solutions revenues increased 6% year over year to $58.85 billion. The improvement was driven by brand and specialty pharmaceutical sales growth from existing customers.
The segment’s profit totaled $645 million, up 21% from the year-ago period’s level. The upside was primarily driven by contributions from brand and specialty products and positive generics program performance.
Global Medical Products and Distribution
Revenues in this segment totaled $3.13 billion, down 2% year over year. The decline primarily reflected lower distribution volumes and the recognition of expected IEEPA tariff refund repayments to customers, partially offset by Cardinal Health brand growth.
The segment reported a profit of $150 million compared with $70 million in the year-ago quarter. This improvement was primarily driven by IEEPA tariff refunds.
Other
This segment includes three operating segments — Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight Logistics. Revenues totaled $1.72 billion, up 7% year over year, driven by growth across all three operating segments.
The segment’s profit amounted to $183 million, up 14% from the year-ago level. This upside was driven by growth in OptiFreight Logistics and at-Home Solutions.
Q4 Margin Analysis
Gross profit increased 16% year over year to $2.56 billion. As a percentage of revenues, the gross margin in the reported quarter was approximately 4.0%, up almost 36 basis points year over year.
Distribution, selling, general and administrative expenses totaled $1.63 billion, up 10% year over year.
Operating income amounted to $729 million, up 70% year over year. Adjusted operating income increased 30% year over year to $935 million.
Financial Update
The company exited the reported quarter with cash and cash equivalents of $4.86 billion compared with $3.94 billion at the end of the third quarter of fiscal 2026.
Net cash provided by operating activities totaled $5.17 billion compared with $2.39 billion in the year-ago period.
CAH Sets FY27 Growth Targets
Cardinal Health raised its fiscal 2027 earnings guidance.
CAH expects fiscal 2027 adjusted earnings per share in the range of $12.40-$12.60, implying growth of 13-15% from adjusted fiscal 2026 results excluding the IEEPA tariff refund benefit.
The company expects revenues from the Pharmaceutical and Specialty Solutions segment to grow 3-5% year over year. Segmental profit is projected to increase 8-11%.
Revenues from the Global Medical Products and Distribution segment are anticipated to grow 2-4%. Segmental profit is expected to be between $200 million and $220 million.
Revenues from the Other segment are likely to increase 11-13%. Segmental profit is projected to grow 15-18%.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in estimates review.
VGM Scores
Currently, 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 score of A on the value side, putting it in the top 20% for value investors.
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 looks promising. Notably, Cardinal has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Cardinal is part of the Zacks Medical - Dental Supplies industry. Over the past month, McKesson (MCK), a stock from the same industry, has gained 1.5%. The company reported its results for the quarter ended June 2026 more than a month ago.
McKesson reported revenues of $105.38 billion in the last reported quarter, representing a year-over-year change of +7.7%. EPS of $9.93 for the same period compares with $8.26 a year ago.
For the current quarter, McKesson is expected to post earnings of $10.75 per share, indicating a change of +9% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.6% over the last 30 days.
McKesson has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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This article originally published on Zacks Investment Research (zacks.com).
