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Cardinal Health (CAH) to Post Q1 Earnings: What's in Store?

Cardinal Health's (CAH) fiscal first-quarter results are likely to reflect solid performance in the Pharmaceutical segment.

This story originally appeared on Zacks

Cardinal Health, Inc. CAH is scheduled to report first-quarter fiscal 2022 results on Nov 9, before the opening bell.

In the last reported quarter, the company delivered a negative earnings surprise of 34.8%. Its earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, the average surprise being 3.6%.

- Zacks

Q1 Estimates

For the fiscal first quarter, the Zacks Consensus Estimate for earnings is pegged at $1.32 per share, indicating a decline of 12.6% from the prior-year quarter. The same for revenues stands at $41.76 billion, suggesting growth of 6.9% from the year-ago reported figure.

Factors to Note

Cardinal Health’s Pharmaceutical segment is the second largest pharmaceutical distributor in the United States. Despite the COVID-19 pandemic induced disruption, the segment exhibited better performance in fiscal 2021 primarily on the back of growth in sales from Pharmaceutical Distribution and Specialty Solutions customers. This momentum is likely to have continued in the fiscal first quarter of 2022.

In fact, higher contribution from key growth areas — Specialty and Connected Care — is likely to have favored the segment’s performance in the to-be-reported quarter.

Cardinal Health, Inc. Price and EPS Surprise

Cardinal Health, Inc. Price and EPS Surprise

Cardinal Health, Inc. price-eps-surprise | Cardinal Health, Inc. Quote

Cardinal Health’s Medical unit may have contributed significantly to the overall fiscal first-quarter performance. The segment manufactures products such as single-use surgical drapes, gowns and apparel, exam and surgical gloves, which might have driven sales in the to-be-reported quarter.

In the fiscal first quarter, revenues at this segment are likely to reflect positive pricing impact of personal protective equipment (PPE) and increase in volumes in its lab business.

Apart from this, the company has been committed toward improving efficiencies across its Medical segment by refining commercial, operational and data capabilities. We anticipate these to get reflected in the fiscal first-quarter results.

Per the fiscal second-quarter earnings 2021 call, the company has been bolstering its core Medical and Pharmaceutical Distribution and product capabilities as it continues to embrace the resilient business models for the future. Cardinal Health continues to show solid progress in both its segments and supply chain work streams, and generating near and long-term efficiencies. The company’s fiscal first-quarter results are likely to reflect the impact of the same.

However, stiff competition in each of the company’s business segments is likely to have weighed on the segment margins and consequently, might have limited profitability in the fiscal first quarter.

Here’s What the Quantitative Model Suggests

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

Earnings ESP: Cardinal Health has an Earnings ESP of -2.12%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #4 (Sell).

Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

BellRing Brands, Inc. BRBR has an Earnings ESP of +14.11% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

TransMedics Group, Inc. TMDX has an Earnings ESP of +11.11% and a Zacks Rank of 3.

IM Cannabis Corp. IMCC has an Earnings ESP of +25.00% and a Zacks Rank of 3.

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