Economic Context - President Trump announced a "national economic emergency" and introduced a baseline 10% tariff on all countries to address a $1.2 trillion trade deficit, effective April 5 [1][5] - The tariffs are expected to escalate tensions and potentially lead to a global trade war, impacting market stability [8] Market Reaction - Following the announcement, Dow futures dropped over 800 points (2%), while S&P 500 futures and Nasdaq 100 futures fell by 2.7% and 3.6% respectively, indicating market apprehension [2] - Prior to the announcement, stocks had rallied as investors were optimistic about the tariffs being manageable [7] Investment Recommendations - In light of the market turmoil, it is advisable to invest in defensive sectors such as utilities, consumer staples, and healthcare [3] - Recommended stocks include: - **Southwest Gas Holdings, Inc. (SWX)**: Expected earnings growth rate of 17.1%, Zacks Rank 2, beta of 0.50, dividend yield of 3.45% [10] - **CMS Energy Corporation (CMS)**: Expected earnings growth rate of 7.8%, Zacks Rank 2, beta of 0.34, dividend yield of 2.89% [12] - **Molson Coors Beverage Company (TAP)**: Expected earnings growth rate of 6.2%, Zacks Rank 2, beta of 0.69, dividend yield of 3.07% [14] - **Sony Group Corporation (SONY)**: Expected earnings growth rate of 11.9%, Zacks Rank 1, beta of 0.94, dividend yield of 1.84% [16] - **Cardinal Health, Inc. (CAH)**: Expected earnings growth rate of 5.4%, Zacks Rank 2, beta of 0.61, dividend yield of 1.47% [18] Stock Characteristics - The recommended stocks are characterized as low-beta (beta greater than 0 but less than 1), which typically indicates lower volatility compared to the market [4]

Market Overview - Wall Street experienced volatility in Q1 2025, with U.S. stock markets expected to close negatively, contrasting with the previous two years' performances [1] - The S&P 500 and Nasdaq Composite are in negative territory year to date, while the Dow remains almost flat; small-cap and mid-cap indexes also reflect negative trends [2] Non-Tech Stock Performance - Despite the overall market downturn, several non-tech stocks have thrived, providing double-digit returns year to date [3][7] - Five recommended non-tech stocks include Tapestry Inc. (TPR), WEC Energy Group Inc. (WEC), CenterPoint Energy Inc. (CNP), CME Group Inc. (CME), and Cardinal Health Inc. (CAH), all showing favorable Zacks Rank indicating potential upside [4][8] Tapestry Inc. (TPR) - Tapestry reported robust revenue growth driven by Coach's performance and international expansion, raising its full-year revenue outlook to $6.85 billion, a 3% year-over-year growth [12] - Expected revenue and earnings growth rates for TPR are 3% and 14.5%, respectively, with a current dividend yield of 1.87% [13] WEC Energy Group Inc. (WEC) - WEC benefits from organic and inorganic asset contributions, with strategic investments aimed at strengthening infrastructure and achieving net carbon-neutral targets by 2050 [14] - Expected revenue and earnings growth rates for WEC are 9.2% and 8.5%, respectively, with a current dividend yield of 3.42% [16] CenterPoint Energy Inc. (CNP) - CenterPoint is positioned to benefit from increasing electricity demand due to the electrification of transportation and investments in renewable energy [17] - Expected revenue and earnings growth rates for CNP are 2.7% and 8%, respectively, with a current dividend yield of 2.50% [20] CME Group Inc. (CME) - CME Group's strong market position is supported by diverse derivative product lines and strategic expansions, with a focus on electronic trading and product innovation [21] - Expected revenue and earnings growth rates for CME are 4% and 3.4%, respectively, with a current dividend yield of 1.91% [23] Cardinal Health Inc. (CAH) - Cardinal Health is the second largest pharmaceutical distributor in the U.S., with its Pharmaceutical segment driving growth through various services [24] - Expected revenue and earnings growth rates for CAH are -1.9% and 5.4%, respectively, with a current dividend yield of 1.52% [26]

Core Insights - Cardinal Health's pharmaceutical segment shows resilience and growth, driven by strong demand for brand, specialty, and generic pharmaceuticals, with significant revenue contributions from GLP-1 medications and specialty distribution [1][2] - The company is strategically focusing on expanding its specialty pharmaceutical business, which is expected to capitalize on industry trends favoring high-value therapeutics [2][7] - The GMPD segment has improved significantly, with a year-over-year profit increase of approximately $240 million, indicating successful turnaround efforts [3][8] Financial Performance - Cardinal Health's shares have declined by 7.2% year-to-date, compared to a 4% decline in the industry and a 4.6% decrease in the S&P 500 Index [4] - Analysts have raised earnings estimates for fiscal years 2025 and 2026, indicating expectations of continued business improvement [10] Strategic Initiatives - The company aims to achieve a GMPD segmental profit target of $300 million by fiscal year 2026, focusing on cost containment and productivity enhancements [8] - Cardinal Health has identified opportunities to unlock at least $500 million in cash flow over the next two years through working capital improvements and business simplifications [9] Long-Term Growth Drivers - Strategic acquisitions, such as GI Alliance and ION, are expected to drive long-term growth and strengthen Cardinal Health's position in high-margin therapeutic areas [7][13] - The company's capital allocation strategy includes a $750 million share buyback commitment for fiscal 2025, balancing acquisitions and disciplined share repurchases [14] Market Challenges - Cardinal Health faces temporary revenue headwinds due to customer contract transitions, particularly the expiration of a major contract with Optum Rx [15] - Rising healthcare costs and operational expenses, especially in the GMPD segment, have pressured margins, although inflation mitigation efforts have been somewhat effective [16][17] Competitive Positioning - The company is leveraging specialty networks, logistics solutions, and supply-chain technologies to maintain a competitive edge in pharmaceutical distribution [17][18] - Despite challenges from COVID-19 vaccine-related revenue declines, Cardinal Health's diversified revenue base and focus on specialty pharmaceuticals position it for long-term stability and growth [18]

Company Performance - Cardinal Health (CAH) closed at $133.98, with a +0.93% change from the previous day, outperforming the S&P 500's loss of 1.12% [1] - Over the past month, shares of Cardinal Health have appreciated by 3.87%, while the Medical sector and S&P 500 experienced losses of 2.99% and 2.91%, respectively [1] Upcoming Financial Results - Cardinal Health is set to announce its earnings on May 1, 2025, with a forecasted EPS of $2.15, reflecting a 3.37% increase from the same quarter last year [2] - The consensus estimate projects revenue of $55.03 billion, indicating a 0.21% rise from the equivalent quarter last year [2] Fiscal Year Estimates - For the entire fiscal year, Zacks Consensus Estimates predict earnings of $7.94 per share and revenue of $222.62 billion, showing changes of +5.44% and -1.92% from the previous year, respectively [3] - Recent changes to analyst estimates suggest a positive outlook for Cardinal Health's business [3] Valuation Metrics - Cardinal Health has a Forward P/E ratio of 16.71, which is a discount compared to the industry's average Forward P/E of 16.86 [6] - The company has a PEG ratio of 1.75, while the industry average PEG ratio is 1.78 [6] Industry Ranking - The Medical - Dental Supplies industry, part of the Medical sector, has a Zacks Industry Rank of 81, placing it in the top 33% of all industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Group 1 - Cardinal Health plans to release its third-quarter financial results for fiscal year 2025 on May 1, prior to the opening of trading on the New York Stock Exchange [1] - A webcast discussion of the financial results will begin at 8:30 a.m. Eastern on the same day [1] - The webcast and corresponding slide presentation can be accessed via Cardinal Health's Investor Relations page without an access code [2] Group 2 - Cardinal Health is a distributor of pharmaceuticals and specialty products, a global manufacturer and distributor of medical and laboratory products, and a supplier of home-health and direct-to-patient products and services [3] - The company operates nuclear pharmacies and manufacturing facilities, and provides performance and data solutions [3] - Cardinal Health emphasizes a customer-centric focus that drives continuous improvement and leads to innovative solutions [3]

Core Insights - Cardinal Health participated in the Leerink Partners Global Healthcare Conference, with CFO Aaron Alt and Investor Relations representative Matt Sims present for discussions [1][3]. Group 1: Company Overview - The management team expressed delight in engaging with stakeholders and highlighted the importance of the recent Q2 earnings call held at the end of January [3]. - The next earnings release is scheduled for May 1, which will cover Q3 results [3]. Group 2: Financial Updates - The company indicated that there would not be substantial updates from the Q2 earnings during this conference call [4].

Core Viewpoint - Cardinal Health has elected Robert Musslewhite and Sudhakar Ramakrishna as independent directors, effective March 7, 2025, enhancing the board's expertise in technology and healthcare [1][4]. Group 1: New Board Members - Robert Musslewhite has over 20 years of leadership experience, including roles as CEO of Definitive Healthcare Corp. and OptumInsight, and will serve on the Audit and Human Resources and Compensation Committees [2][5]. - Sudhakar Ramakrishna is a seasoned CEO with more than two decades in technology, previously leading SolarWinds Corporation and will be part of the Audit and Risk Oversight Committees [3][7]. Group 2: Contributions to the Company - Musslewhite's background in advanced analytics and technology in healthcare is expected to significantly benefit Cardinal Health [4]. - Ramakrishna's leadership in technology and business strategy is anticipated to enhance the company's ability to navigate complex environments [4]. Group 3: Company Overview - Cardinal Health operates as a distributor of pharmaceuticals and specialty products, a global manufacturer of medical products, and a provider of performance and data solutions [9]. - The company emphasizes a customer-centric focus that drives continuous improvement and innovation [10].

Core Insights - Consistent earnings growth signals a company's profitability, but earnings acceleration is more effective in boosting stock prices [1] - Successful stocks typically experience earnings acceleration prior to stock price increases [1] Earnings Acceleration Definition - Earnings acceleration refers to the incremental growth in a company's earnings per share (EPS), specifically when quarter-over-quarter earnings growth rates increase over time [2] Importance of Earnings Acceleration - Unlike earnings growth, which may already be reflected in stock prices, earnings acceleration helps identify stocks that have not yet attracted investor attention, leading to potential price rallies [3] - An increasing percentage of earnings growth indicates a fundamentally sound company, while a sideways or decelerating growth percentage may signal consolidation or decline [4] Screening Parameters - Stocks are screened based on the last two quarter-over-quarter EPS growth rates exceeding previous periods' growth rates, with projected EPS growth rates for the upcoming quarter expected to exceed prior periods [5][6] - Additional criteria include a current price of at least $5 and an average 20-day trading volume of at least 50,000 to ensure adequate liquidity [6] Top Stocks Identified - Prairie Operating Co. (PROP) is an independent energy company with a Zacks Rank 1 (Strong Buy) and an expected earnings growth rate of 81.2% for the current year [7] - Intuit Inc. (INTU) offers financial management products and has a Zacks Rank 3 (Hold) with an expected earnings growth rate of 13.8% [9] - Cardinal Health, Inc. (CAH) is a global healthcare services company with a Zacks Rank 2 (Buy) and an expected earnings growth rate of 5.4% [10]

Core Insights - Cardinal Health reported better-than-expected second-quarter financial results, with adjusted earnings of $1.93 per share, surpassing market estimates of $1.76 per share, and sales of $55.3 billion, exceeding expectations of $54.915 billion [1][2]. Financial Performance - The company delivered strong second-quarter results, driven by robust demand in the Pharmaceutical and Specialty Solutions segment [2]. - Cardinal Health raised its fiscal year 2025 non-GAAP earnings guidance from a range of $7.75-$7.90 per share to $7.85-$8.00 per share [2]. Stock Performance - Following the earnings announcement, Cardinal Health shares gained 1.3%, trading at $126.92 [3]. - Analysts adjusted their price targets for Cardinal Health, with Wells Fargo raising it from $135 to $136 and JP Morgan increasing it from $142 to $145 [5].

Core Viewpoint - Cardinal Health, Inc. reported strong second-quarter fiscal 2025 results, with adjusted earnings per share (EPS) of $1.93, exceeding estimates and showing year-over-year growth [1][12] Revenue Details - Total sales decreased by 3.8% year-over-year to $55.26 billion, but still surpassed consensus estimates by 0.7% [2] Segmental Analysis - **Pharmaceutical and Specialty Solutions**: Revenues fell 4.4% to $50.85 billion, primarily due to the expiration of a customer contract with OptumRx. Excluding this impact, sales increased by 17% [3] - **Pharmaceutical Profit**: Increased by 7% to $531 million, driven by growth in BioPharma Solutions and brand products, partially offset by the contract expiration [4] - **Global Medical Products and Distribution**: Revenues rose by 0.9% to $3.15 billion, supported by growth from existing customers [4] - **Other Segment**: Sales grew by 13% to $1.28 billion, with profits increasing by 11% to $118 million, driven by strong performance in OptiFreight Logistics and Nuclear and Precision Health Solutions [5][6] Margin Analysis - Gross profit increased by 4.7% year-over-year to $1.94 billion, with a gross margin of 3.5%, up 30 basis points [7] - Operating income rose by 8.7% to $549 million, with adjusted operating income increasing by 8.5% to $635 million [7] Financial Update - The company ended the quarter with cash and cash equivalents of $3.81 billion, up from $2.87 billion in the previous quarter [8] - Net cash used in operating activities was $400 million, a significant decrease from $1.18 billion in the prior year [9] 2025 Outlook - Cardinal Health raised its fiscal 2025 earnings guidance, now expecting adjusted EPS between $7.85 and $8.00, up from $7.75-$7.90 [10] - Pharmaceutical segment revenues are projected to decline by 1-3%, while segment profit is expected to increase by 10-12% [10] - Medical segment revenues are estimated to grow by 2-4%, with segment profit expected between $130-$150 million [11] - Other segment revenues are likely to grow by 10-12%, with segment profit expected to grow nearly 10% [11] Conclusion - Cardinal Health exited the fiscal second quarter positively, with earnings and revenues exceeding estimates, although sales may face pressure from the OptumRx contract expiration [12] - The company anticipates continued growth from its medical products and other segments, with an optimistic outlook for segmental profit and gross margin expansion [13] - The completion of the acquisition of a majority stake in GI Alliance supports Cardinal Health's multi-specialty growth strategy [14]