Cardinal Health (CAH) is a steady performer in a stable business with a safe dividend.
Growth and Income
The company is expected to grow its EPS 10.6% over the next three to five years. The stock also offers investors a dividend yield of 2.3%.
This Zacks #2 Rank stock trades at 15.4x fiscal year 2010 consensus EPS estimates and 13.9x fiscal year 2011 consensus EPS estimates.
Cardinal Health provides health care products and services primarily in the US. Its largest segment distributes branded and private-label pharmaceuticals to retail customers, hospitals, and alternate care providers.
Fiscal Third-Quarter Results
Cardinal’s revenue rose 1% to $24.3 billion from $24.1 billion in the year-ago quarter. Pharmaceutical business revenue was $22.2 billion and medical segment revenue was $2.1 billion.
Based on the results, Cardinal Health increased its fiscal year 2010 guidance. It now expects to earn $2.15-$2.20 per share, up from its previous guidance of $2.08-$2.18 per share.
Management also issued fiscal year 2011 EPS guidance of $2.35-$2.45 per share.
On June 9, Cardinal Health plans to buy Healthcare Solutions Holding LLC (HSH) for $517 million in cash. HSH provides tools and services like product data and claims management help for specialty care industry doctors, payers, and drug makers.
On May 5, Cardinal raised its quarterly dividend by 19.5 cents, or 11%. The dividend is payable July 15 to shareholders of record as of July 1.
In the last month, the Zacks Consensus Estimate for 2010 and 2011 are each higher by 1 cent to $2.21 and $2.45, respectively.
CAH shares have been in a narrow trading range for the last seven months. The low end of the range is $32 and the high end is $36. The stock’s 200-day moving average appears to be an area of support, as CAH has bounced off that level four times in the last seven months. The stock is down about $2, or 6%, from its 52-week high.