Cardinal Health Inc (CAH, Financial), a prominent player in the medical distribution industry, has recently demonstrated impressive stock performance. Over the past week, the company's stock price has surged by 7.68%, and over the last three months, it has gained an additional 10.77%. Currently, the market capitalization stands at $25.96 billion, with a stock price of $106.6. According to GuruFocus's valuation metrics, the stock is fairly valued with a GF Value of $100.69, suggesting that the stock price is aligned with its intrinsic value.
Overview of Cardinal Health Inc
Cardinal Health Inc, a key entity in the medical distribution sector, is engaged in the sourcing and distribution of pharmaceutical products to a diverse range of healthcare providers. The company is one of the top three pharmaceutical wholesalers in the United States, holding a significant market share alongside Cencora and McKesson. Cardinal Health's operations are not limited to pharmaceuticals; it also supplies medical-surgical products and equipment across North America, Europe, and Asia, making it a critical link in global healthcare supply chains.
Assessing Cardinal Health's Profitability
Cardinal Health's financial health is robust, with a Profitability Rank of 7/10. The company's operating margin stands at 0.94%, which is more competitive than 25.24% of its peers in the industry. Remarkably, its Return on Equity (ROE) is reported at an unusually high percentage, which indicates an error in data reporting or an extraordinary, non-recurring gain. The Return on Assets (ROA) of 1.24% and Return on Invested Capital (ROIC) of 12.06% further demonstrate the company's ability to generate profits relative to its assets and invested capital. Over the past decade, Cardinal Health has maintained profitability for eight years, showcasing its financial stability and operational efficiency.
Growth Trajectory of Cardinal Health
The company's growth metrics are equally compelling. Cardinal Health holds a Growth Rank of 4/10. It has achieved a 3-Year Revenue Growth Rate per Share of 14.50%, outperforming 73.2% of its competitors. The 5-Year Revenue Growth Rate per Share stands at 11.80%, which is better than 77.01% of similar companies. However, the growth in Earnings Per Share (EPS) without Non-Recurring Items (NRI) over the past three and five years has been modest at 2.00% and 1.80%, respectively. Looking ahead, the estimated EPS growth rate for the next three to five years is projected at 11.84%, indicating potential for future earnings expansion.
Influential Investors and Market Position
Several notable investors have taken positions in Cardinal Health, reflecting confidence in its market stance and future prospects. Renaissance Technologies (Trades, Portfolio) holds approximately 1,683,447 shares, representing 0.69% of the shares outstanding. Charles Brandes owns 1,194,209 shares, and Richard Pzena (Trades, Portfolio) holds 664,657 shares, underscoring the investment appeal of Cardinal Health among savvy market players.
Competitive Landscape
Cardinal Health operates in a competitive landscape with major players like Henry Schein Inc (HSIC, Financial) with a market cap of $8.75 billion, Cencora Inc (COR, Financial) valued at $46.49 billion, and Patterson Companies Inc (PDCO, Financial) with a market cap of $2.15 billion. Despite the intense competition, Cardinal Health's comprehensive product offerings and extensive distribution network provide it with a competitive edge in the medical distribution industry.
Conclusion
Cardinal Health Inc has shown a solid track record of profitability and consistent growth, making it a noteworthy contender in the medical distribution sector. The company's recent stock performance, characterized by significant gains over short and medium-term periods, coupled with a fair valuation and robust financial metrics, positions it favorably among its peers. As the healthcare industry continues to evolve, Cardinal Health's strategic market position and operational efficiency are likely to drive its continued success and appeal to investors.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
