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Cardinal Health (CAH) Q2 Earnings Beat Estimates, Rise Y/Y

Cardinal Health Inc.CAH reported second-quarter fiscal 2017 adjusted earnings of $1.34 per share, which beat the Zacks Consensus Estimate of $1.24 and increased 3% on a year-over-year basis.

Revenues increased 5% on a year-over-year basis to $33.1 billion. The figure however came below the Zacks Consensus Estimate of $33.4 billion.

Stock Performance

Over the last three months, the stock added 16.22%, higher than the Zacks classified Medical - Dental Supplies sub-industry's gain of almost 5.71%. Also, the current level compares favorably with the S&P 500's return of 9.94% over the same time frame.

Added to this, a long-term expected earnings growth rate of 9.57% instills confidence in investors.

Cardinal Health, Inc. Price, Consensus and EPS Surprise

Cardinal Health, Inc. Price, Consensus and EPS Surprise | Cardinal Health, Inc. Quote

Quarter Details

Pharmaceutical revenues increased 5% to $29.7 billion due to strong growth from existing and net new distribution customers. Strong performance by the Specialty business also drove results.

Medical segment revenues increased 8% to $3.4 billion. Higher contribution from acquisitions and net new and existing customers were primarily responsible for the growth in Medical segment revenues.

Pharmaceutical segment profit in the quarter decreased 14% to $537 million due to generic pharmaceutical pricing and the loss of a large Pharmaceutical Distribution customer. This was partially offset by solid performance by Red Oak Sourcing.

Medical segment profit soared 50% to $159 million due to higher contribution from Cardinal Health Brand products.

Distribution, selling, general and administrative (SG&A) expenses decreased 1% on a year-over-year basis to $910 million in the reported quarter. Net income declined 11% to $633 million from last fiscal year's $709 million.

Financial Condition

Cash and cash equivalents were $1.88 billion as of Dec 31, 2016 compared with $2.36 billion as of Jun 30, 2016. Long-term debt was $4.86 billion as of Dec 31, 2016 compared with the Jun 30, 2016 level of $4.95 billion.

Guidance

Based on fiscal second-quarter results, the company lowered its fiscal 2017 guidance range for adjusted earnings per share from continuing operations to $5.35 to $5.50 from $5.40 to $5.60. The outlook represents growth of approximately 2% to 5% from the prior fiscal year.

Zacks Rank & Stocks to Consider

Currently, Cardinal Health carries a Zacks Rank #3 (Hold).

Better-ranked medical stocks are Glaukos Corporation GKOS , Cardiovascular Systems CSII and Neogen Corp. NEOG . Glaukos sports a Zacks Rank #1 (Strong Buy) while Cardiovascular Systems and Neogen carry a Zacks Rank #2. ou can see the complete list of today's Zacks #1 Rank stocks here.

Glaukos gained over 100% in the last one year in comparison to the S&P 500's gain of only 19.7%. The company has a stellar four-quarter average earnings surprise of over 100%.

Cardiovascular Systems surged over 100% in the last one year in comparison to the S&P 500. It has a four-quarter average earnings surprise of 67.8%.

Neogen gained 26.0% in the past one year, better than the S&P 500 mark. The stock has impressive earnings growth of 16.7% for the next five years compared with the industry average of 15.2%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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