Market Overview - The first half of 2025 experienced increased volatility and uncertainty due to President Trump's tariffs and a faster-than-expected cooling of inflation, leading to market recovery [1] - Recent months have shown favorable market conditions with easing trade tensions and a reduction in the Middle East crisis [1] Stock Performance and Recommendations - Optimism regarding artificial intelligence is expected to continue supporting stock prices, particularly in technology sectors [2] - Cooling inflation raises expectations for potential rate cuts starting in September 2025, contributing to a positive market outlook [2] - Stocks such as Cracker Barrel Old Country Store (CBRL), BGSF, ArcBest Corporation (ARCB), Cardinal Health (CAH), and AutoNation (AN) are recommended for monitoring as the second half of 2025 begins [2][6] Screening Strategy - A screening strategy has been developed to identify stocks based on improving broker recommendations and upward revisions in earnings estimates over the past four weeks [3] - The price/sales ratio is included as a valuation metric, focusing on companies with strong top-line performance [3] Screening Criteria - The top 75 companies with net upgrades in broker ratings over the last four weeks are identified [4] - The top 10 stocks with the highest percentage change in earnings estimates for the upcoming quarter are highlighted [4] - Companies in the bottom 10% of price-to-sales ratios are included for better valuation [4] Company Highlights - Cracker Barrel is focusing on menu innovation and pricing strategies to drive growth, introducing new offerings to attract customers [5] - BGSF has seen a 25% increase in shares over the past month and has a Zacks Rank 1, with earnings estimates rising over 300% in the last 60 days [7] - ArcBest is improving productivity and service quality, expecting a 52.1% increase in earnings per share for 2026 compared to 2025 [8] - Cardinal Health is undergoing strategic improvements to revitalize its business model, with its Medical segment expected to drive growth [9][10] - AutoNation's diversified product portfolio and strategic acquisitions support its market position, currently holding a Zacks Rank 3 [11]

Group 1: Company Performance - Cardinal Health (CAH) closed at $165.61, with a daily increase of +1.14%, outperforming the S&P 500's gain of 0.8% [1] - Over the past month, CAH shares increased by 6.94%, surpassing the Medical sector's gain of 3.12% and the S&P 500's gain of 5.12% [1] Group 2: Upcoming Financial Results - The upcoming EPS for Cardinal Health is projected at $2.02, indicating a 9.78% increase year-over-year [2] - The Zacks Consensus Estimate for revenue is $60.65 billion, reflecting a 1.31% increase from the previous year [2] Group 3: Full Year Projections - For the full year, earnings are projected at $8.18 per share, representing an increase of +8.63%, while revenue is expected to be $223.07 billion, a decrease of -1.72% from the prior year [3] Group 4: Analyst Estimates and Stock Performance - Changes in analyst estimates for Cardinal Health are important as they reflect short-term business trends and analysts' confidence in performance [4] - The Zacks Rank system, which incorporates estimate changes, indicates Cardinal Health holds a Zacks Rank of 2 (Buy) [6] Group 5: Valuation Metrics - Cardinal Health has a Forward P/E ratio of 20.03, which is higher than the industry average of 17.14 [7] - The company has a PEG ratio of 1.83, compared to the industry average PEG ratio of 1.7 [8] Group 6: Industry Context - The Medical - Dental Supplies industry, part of the Medical sector, holds a Zacks Industry Rank of 26, placing it in the top 11% of over 250 industries [9]

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Cardinal Health (CAH), and emphasizes the importance of using these recommendations in conjunction with other analytical tools like the Zacks Rank for making informed investment decisions [1][5][10]. Group 1: Brokerage Recommendations - Cardinal Health has an average brokerage recommendation (ABR) of 1.43, indicating a consensus between Strong Buy and Buy, based on recommendations from 14 brokerage firms [2]. - Out of the 14 recommendations, 11 are classified as Strong Buy, accounting for 78.6% of all recommendations [2]. - Despite the positive ABR, reliance solely on brokerage recommendations may not be prudent, as studies indicate limited success in guiding investors towards stocks with the highest price increase potential [5][10]. Group 2: Zacks Rank vs. ABR - The Zacks Rank is a proprietary stock rating tool that classifies stocks into five groups based on earnings estimate revisions, providing a more reliable indicator of near-term price performance compared to ABR [8][11]. - The Zacks Rank is updated more frequently and reflects changes in earnings estimates, making it a timely tool for predicting future price movements [12]. - Cardinal Health's Zacks Consensus Estimate for the current year has increased by 0.9% to $8.16, indicating growing optimism among analysts regarding the company's earnings prospects [13]. Group 3: Investment Implications - The recent change in the consensus estimate, along with other factors, has resulted in a Zacks Rank 2 (Buy) for Cardinal Health, suggesting a favorable outlook for the stock [14]. - The Buy-equivalent ABR for Cardinal may serve as a useful guide for investors when combined with the Zacks Rank [14].

Core Insights - Zacks Premium offers tools for investors to enhance their stock market strategies, including daily updates, research reports, and stock screens [1] Zacks Style Scores - Zacks Style Scores are indicators that help investors select stocks likely to outperform the market in the next 30 days, rated from A to F based on value, growth, and momentum characteristics [2] - The Style Scores consist of four categories: Value Score, Growth Score, Momentum Score, and VGM Score [3][4][5][6] Value Score - The Value Score identifies attractive and discounted stocks using ratios like P/E, PEG, Price/Sales, and Price/Cash Flow [3] Growth Score - The Growth Score focuses on a company's financial strength and future outlook, analyzing projected and historical earnings, sales, and cash flow [4] Momentum Score - The Momentum Score assesses trends in stock price and earnings outlook, utilizing factors like one-week price change and monthly earnings estimate changes [5] VGM Score - The VGM Score combines all three Style Scores, providing a comprehensive indicator for selecting stocks with the best value, growth, and momentum [6] Zacks Rank - The Zacks Rank is a proprietary stock-rating model that leverages earnings estimate revisions to aid investors in portfolio creation [7] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [8] Stock Selection Strategy - To maximize returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [9] - Stocks with a 4 (Sell) or 5 (Strong Sell) rating, even with high Style Scores, are less favorable due to declining earnings forecasts [10] Company Spotlight: Cardinal Health - Cardinal Health is a global healthcare services and products distributor, operating in three segments: Pharmaceutical and Specialty Solutions, Global Medical Products and Distribution, and Other [11] - Cardinal Health holds a 3 (Hold) Zacks Rank and a VGM Score of B, with a Value Style Score of B, supported by a forward P/E ratio of 19.82 [12] - The company has seen upward revisions in earnings estimates, with the Zacks Consensus Estimate increasing by $0.20 to $8.14 per share, and an average earnings surprise of 10.3% [12]

Company Overview - Cardinal Health is a global healthcare services and products distributor, serving hospitals, healthcare providers, pharmacies, and manufacturers [11] - The company operates under three segments: Pharmaceutical and Specialty Solutions, Global Medical Products and Distribution (GMPD), and Other [11] Investment Insights - Cardinal Health has a Zacks Rank of 3 (Hold) and a VGM Score of B, indicating a moderate investment outlook [11] - The company has a Momentum Style Score of B, with shares increasing by 5.6% over the past four weeks [12] - Eight analysts have revised their earnings estimates upwards for fiscal 2025, with the Zacks Consensus Estimate rising by $0.18 to $8.12 per share [12] - Cardinal Health has an average earnings surprise of 10.3%, suggesting potential for positive performance [12]

Summary of Cardinal Health's 2025 Investor Day Company Overview - **Company**: Cardinal Health (CAH) - **Event**: 2025 Investor Day held on June 12, 2025 Key Industry Insights - **Healthcare Industry Role**: Cardinal Health positions itself as a crucial link in the healthcare supply chain, connecting manufacturers to patients through a complex distribution network [7][31] - **Market Trends**: The aging population and ongoing healthcare innovations are driving demand in the healthcare sector, providing a "rising tide" of volume for the industry [32] Core Business Strategies - **Core Distribution Focus**: The company emphasizes strengthening its core distribution business, which is foundational for future growth and profitability [19][20] - **Specialty Solutions Growth**: Specialty solutions remain the highest growth priority, with a focus on organic and inorganic investments in this segment [21][50] - **Investment in Automation**: Cardinal Health is investing in automation to enhance distribution efficiency and capacity, which is critical for meeting customer needs [13][40] Financial Performance and Guidance - **Earnings Growth**: The company raised its fiscal 2025 EPS guidance and confirmed a long-term EPS growth target of 12-14% for fiscal years 2026-2028 [27][55] - **Capital Deployment**: Over the past two years, Cardinal Health has returned nearly $3 billion to shareholders while also increasing capital expenditures by over 50% compared to four to five years ago [25][24] Specialty Solutions and Partnerships - **Specialty Alliance Formation**: The formation of the Specialty Alliance aims to enhance capabilities in gastroenterology, urology, and oncology, leveraging existing infrastructure and expertise [41][90] - **Managed Service Organizations (MSOs)**: The company is expanding its MSO platforms to support independent physicians, providing back-office support and enhancing care delivery [92] Innovations and Technology - **New Distribution Centers**: Cardinal Health is launching a new flagship distribution center with advanced automation technology to improve service levels and efficiency [40][69] - **Technology Investments**: Significant investments in technology infrastructure, including a new ordering platform (Vantas HQ), are aimed at improving customer experience and operational efficiency [70] Market Position and Competitive Advantage - **Diverse Customer Base**: The company serves a wide range of customers, including independent pharmacies, health systems, and specialty practices, allowing it to adapt to various market needs [64][65] - **Strategic Sourcing**: Strong relationships with brand manufacturers and partnerships with CVS enhance product availability and cost efficiency, contributing to profitable growth [66] Future Outlook - **Growth Opportunities**: Cardinal Health anticipates significant growth in its specialty segment, with expectations of doubling the number of supported products in the next three years [98][106] - **Resilience in Cash Flow**: The company has demonstrated strong cash flow resilience, with a consistent upward trend over long periods, indicating robust operational performance [36][37] Conclusion - **Commitment to Innovation**: Cardinal Health is focused on continuous improvement and innovation to meet evolving customer and patient needs, positioning itself for sustained growth in the healthcare industry [34][55]

Financial Performance and Outlook - The company is targeting a 12% to 14% non-GAAP EPS CAGR [22, 72, 325, 369]. - The company expects to generate approximately $9 billion in adjusted free cash flow (FCF) [19]. - The company is raising FY25 EPS guidance to $8.15 - $8.20 [22, 311]. - The company provides FY26 EPS guidance for ~13% growth [22, 328]. - The company anticipates generating $10B+ in total adjusted free cash flow over the next 3 years [347]. Segment Performance and Strategy - Pharma segment profit growth is expected to be 8% CAGR [19]. - Other segment profit growth is expected to be 10% CAGR [19]. - Specialty is now over $40B in revenue, growing at a 14% CAGR over the last 3 years [104]. - GMPD delivered $92M of segment profit in FY24, a ~$240M increase over FY23 [278]. - The company is investing over $150M in NPHS over the next three years [53].

Core Insights - Cardinal Health is hosting an Investor Day to discuss growth strategies and long-term financial outlook [2][3] - The company emphasizes its strong foundation and significant future growth opportunities [3] Strategic Updates - Cardinal Health is focusing on expanding its Pharmaceutical and Specialty Solutions, particularly in Specialty and higher-margin businesses [4] - The Specialty Alliance platform will include the recently acquired GI Alliance and the new Urology Alliance [5] - The MSO platforms now support approximately 2,200 providers across 28 states [6] Biopharma Solutions - Continued investments in Biopharma Solutions are announced, with expansions into oncology and other therapeutic areas [7] - The Sonexus™ Access and Patient Support platform is expected to more than double its supported therapies by fiscal year 2028 [7] Pharmaceutical Distribution - The Consumer Health Logistics Center in Ohio is set to be fully operational by July 2025, aimed at increasing capacity and efficiency [8] - Plans for a new forward distribution center with advanced automation technology are underway [9] Financial Guidance - FY25 non-GAAP diluted EPS guidance is raised to $8.15 to $8.20, with preliminary FY26 guidance set at $9.10 to $9.30 [10][18] - Long-term targets for non-GAAP diluted EPS growth are set at 12% to 14% for FY26 to FY28 [20] Capital Deployment - The company plans to invest at least $600 million annually in capital expenditures and anticipates at least $750 million in share repurchases each year for the next three years [21]

Core Insights - Cardinal Health has launched the Kendall DL™ Multi System, a multi-parameter monitoring solution designed for continuous patient monitoring, which simplifies workflows for healthcare providers [1][4] Product Features - The Kendall DL™ Multi System allows for the monitoring of cardiac activity, blood oxygen levels, and temperature through a single connection, facilitating patient transport from admission to discharge [1] - The system features a proprietary design that reduces false "leads off" alarms and motion-related artifacts in ECG tracings, leading to clearer readings and improved prioritization of care [2] Clinical and Operational Benefits - As a single-patient use product, the system minimizes cross-contamination risks associated with reusable lead wires, thereby reducing infection rates and potential hospital readmissions [3] - The introduction of this system is expected to enhance clinical performance and support the financial performance of healthcare providers by streamlining workflows and addressing operational challenges [4]

Core Insights - McKesson (MCK) and Cardinal Health (CAH) are major players in the U.S. healthcare distribution sector, benefiting from consistent demand and long-term industry trends [1][2] - Investors are evaluating which company presents a stronger investment opportunity amid evolving healthcare regulations and inflationary pressures [2] Financial Performance - McKesson reported Q4 fiscal 2025 adjusted EPS of $10.12, exceeding the Zacks Consensus Estimate of $9.81 by 3.2%, with a year-over-year improvement of 63.8% [3] - Cardinal Health reported Q3 fiscal 2025 adjusted EPS of $2.35, surpassing the Zacks Consensus Estimate of $2.15 by 9.3%, with a year-over-year increase of 12.4% [4] Estimates Comparison - The Zacks Consensus Estimate for McKesson's fiscal 2026 sales and EPS indicates a year-over-year improvement of 12.4% and 12.3%, respectively, with EPS estimates improving by 1.4% over the past 60 days [5] - The Zacks Consensus Estimate for Cardinal Health's 2025 sales suggests a year-over-year decline of 1.7%, while EPS is expected to improve by 7.8%, with EPS estimates increasing by 2.3% over the past 30 days [8] Strategic Positioning - McKesson's diversification into higher-margin areas such as oncology and biopharma services supports margin stability and positions the company well for future growth [11] - McKesson's recent earnings report highlighted solid revenue growth, stable margins, and robust free cash flow, alongside consistent shareholder returns through share repurchases and dividend increases [12] - Cardinal Health is focusing on efficiency gains and cost controls while expanding its higher-growth medical segment, which is expected to drive growth [15] - Cardinal Health's first-quarter performance showed strong revenue growth and improving profitability due to effective cost-saving initiatives [16] Price Performance - Year-to-date, McKesson shares have increased by 25.7%, while Cardinal Health shares have surged by 29.2%, driven by rising demand for drug retailing, particularly GLP-1 drugs [17] Investment Outlook - Both companies currently hold a Zacks Rank 3 (Hold), complicating the investment decision [18] - McKesson's style score of 'A' indicates strong growth prospects and attractive valuation, while Cardinal Health's style score of 'C' reflects attractive valuation but lower growth potential [19] - Based on growth estimates and style scores, McKesson is viewed as a better investment choice at present [19]