Growth & Income: Cardinal Health (CAH)

Cardinal Health (CAH) is in a stable industry with steady revenues and a safe dividend.

Growth and Income

The company is expected to grow its EPS 10.8% 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 13.4x fiscal year 2011 consensus EPS estimates.

Business

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 Fourth-Quarter Results

On August 5, Cardinal reported financial results for the fourth quarter of fiscal year 2010. Cardinal’s revenue rose 0.5% to $24.5 billion from $24.3 billion in the year-ago quarter. The company earned $0.50 per share, beating the Zacks Consensus Estimate by a penny.

For fiscal 2011, the company now expects to earn $2.38-$2.48 per share, up from its previous guidance of $2.35-$2.45 per share.

Addiditional Fourth-Quarter Highlights

Cardinal Health increased the regular quarterly dividend by 11% to $0.195 per share. It completed the acquisition of Healthcare Solutions Holding (P4 Healthcare and P4 Pathways) to bolster company offerings to specialty pharmaceutical customers. Lastly, there was record-breaking attendance at the company’s annual Retail Business Conference, where the company launched new products and services that were well received by its retail independent customers.

Estimates

As the stock just reported Q4 results, the consensus numbers don’t reflect new analyst estimates. The current Zacks Consensus Estimates are $2.44 for fiscal 2011. With the higher company guidance, consensus estimates might be headed higher by a penny or two.

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