Cardinal Health (CAH) Q4 Earnings: Disappointment In Store?

Cardinal Health Inc. CAH is set to report fourth-quarter fiscal 2016 earnings results on Aug 2. Last quarter, the company reported earnings of $1.43 per share, which beat the Zacks Consensus Estimate by a dime.

Notably, Cardinal Health posted a positive earnings surprise of 9.75% on an average over the last four quarters.

Let’s see how things are shaping up for this announcement.

Factors at Play

Cardinal Health is banking on acquisitions, strategic buyouts, joint ventures and supply agreements to drive growth. The aging population presents a significant growth opportunity for the company.
 

CARDINAL HEALTH Price and EPS Surprise

CARDINAL HEALTH Price and EPS Surprise | CARDINAL HEALTH Quote

However, Cardinal Health anticipates generic sales to remain sluggish in the near term. Further, generic pricing pressure remains a concern. We believe the Red Oak sourcing venture with CVS Health will help Cardinal Health to fend off this headwind.

Meanwhile, the company’s growing product volumes in the nuclear pharmacy business is a positive. Additionally, Cardinal Health’s focus on participating in the manufacture and distribution of new therapeutic radio biopharmaceuticals are expected to diversify revenues.

Moreover, the synergies from the acquisitions of Metro Medical, The Harvard Drug Group and Cordis are key catalysts. Moreover, strong growth in China (strong double-digit top and bottom-line growth in the third quarter) is predicted to drive Cardinal Health’s top-line growth.

Earnings Whispers

Our proven model does not conclusively show that Cardinal Health is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Cardinal Health has an Earnings ESP of -1.11%. That is because the Most Accurate estimate of $1.11 is lower than the Zacks Consensus Estimate of $1.13.

Zacks Rank: Cardinal Health carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Nektar Therapeutics NKTR with an Earnings ESP of +50.00% and Zacks Rank #1.

GlycoMimetics Inc. GLYC with an Earnings ESP of +13.64% and Zacks Rank #1.

ANI Pharmaceuticals Inc. ANIP with an Earnings ESP of +2.63% and a Zacks Rank #1.

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NEKTAR THERAP (NKTR): Free Stock Analysis Report
 
GLYCOMIMETICS (GLYC): Free Stock Analysis Report
 
CARDINAL HEALTH (CAH): Free Stock Analysis Report
 
ANI PHARMACEUT (ANIP): Free Stock Analysis Report
 
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