A strong stock as of late has been Cardinal Health (CAH). Shares have been marching higher, with the stock up 7.2% over the past month. The stock hit a new 52-week high of $215.48 in the previous session. Cardinal has gained 3.9% since the start of the year compared to the 7.1% gain for the Zacks Medical sector and the 16.4% return for the Zacks Medical - Dental Supplies industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on October 30, 2025, Cardinal reported EPS of $2.55 versus consensus estimate of $2.21 while it beat the consensus revenue estimate by 8.39%.
For the current fiscal year, Cardinal is expected to post earnings of $9.93 per share on $258.8 in revenues. This represents a 20.51% change in EPS on a 16.27% change in revenues. For the next fiscal year, the company is expected to earn $10.93 per share on $277.49 in revenues. This represents a year-over-year change of 10.11% and 7.22%, respectively.
Valuation Metrics
Though Cardinal has recently hit a 52-week high, what is next for Cardinal? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Cardinal has a Value Score of A. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 21.5X current fiscal year EPS estimates, which is a premium to the peer industry average of 18.3X. On a trailing cash flow basis, the stock currently trades at 18.3X versus its peer group's average of 13.4X. Additionally, the stock has a PEG ratio of 1.51. This is good enough to put the company in the top echelon of all stocks we cover from a value perspective, making Cardinal an interesting choice for value investors.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this is even more important than the company's VGM Score. Fortunately, Cardinal currently has a Zacks Rank of #2 (Buy) thanks to a solid earnings estimate revision trend.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Cardinal passes the test. Thus, it seems as though Cardinal shares could have a bit more room to run in the near term.
How Does CAH Stack Up to the Competition?
Shares of CAH have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is McKesson Corporation (MCK). MCK has a Zacks Rank of #2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. McKesson Corporation beat our consensus estimate by 10.54%, and for the current fiscal year, MCK is expected to post earnings of $38.61 per share on revenue of $408.23 billion.
Shares of McKesson Corporation have gained 4.1% over the past month, and currently trade at a forward P/E of 21.86X and a P/CF of 21.72X.
The Medical - Dental Supplies industry is in the top 37% of all the industries we have in our universe, so it looks like there are some nice tailwinds for CAH and MCK, even beyond their own solid fundamental situation.
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Cardinal Health, Inc. (CAH): Free Stock Analysis Report McKesson Corporation (MCK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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