Why Cardinal Health (CAH) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of Cardinal Health  (CAH) are down -3.94% to $69.52 after the healthcare services company said its fiscal fourth quarter revenue declined, due to the continuing impact of the expiration of the Walgreen (WAG) contract.

The company reported a profit of $234 million, or 68 cents per share, compared with a loss of $586 million a year ago, or $1.72 per share.

Adjusted earnings were 83 cents per share, up from 79 cents a year ago. The year earlier period included an $832 million write-down tied to the company's nuclear pharmacy services division.

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Revenue slid 10% to $22.9 billion. Excluding the impact of the Walgreen contract expiration, revenue was up 12%, the company said.

Analysts polled by Thomson Reuters projected earnings of 81 cents per share on revenue of $21.9 billion.

TheStreet Ratings team rates CARDINAL HEALTH INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CARDINAL HEALTH INC (CAH) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, CAH's share price has jumped by 43.04%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The debt-to-equity ratio is somewhat low, currently at 0.60, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that CAH's debt-to-equity ratio is low, the quick ratio, which is currently 0.60, displays a potential problem in covering short-term cash needs.
  • CARDINAL HEALTH INC's earnings per share declined by 9.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, CARDINAL HEALTH INC reported lower earnings of $0.95 versus $3.07 in the prior year. This year, the market expects an improvement in earnings ($3.82 versus $0.95).
  • The revenue fell significantly faster than the industry average of 21.2%. Since the same quarter one year prior, revenues fell by 12.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The gross profit margin for CARDINAL HEALTH INC is currently extremely low, coming in at 6.36%. Regardless of CAH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.47% trails the industry average.
  • You can view the full analysis from the report here: CAH Ratings Report

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