Cardinal Health is engaged in a price war with the 2 other large pharmaceutical distributors in its industry, AmerisourceBergen (ABC) and McKesson (MCK).
When companies have price wars, profits decline. And that fear has pushed Cardinal Health’s price down.
The company released its 2nd quarter results this morning. Adjusted earnings-per-share actually rose 3% versus the same quarter a year ago (before the pricing pressure).
Cardinal Health is still growing even through a price war.
Cardinal Health’s pharmaceutical distribution segment saw operating profit decline 14%. That was expected. The company’s medical distribution segment saw operating profit surge 50%, however.
And, Cardinal Health increased its guidance for fiscal 2017. The company is now expecting 2% to 5% adjusted earnings-per-share growth on the year, in what could’ve been a down year.
The market responded favorably to this news. Cardinal Health is up 2.2% as of this writing while the market is flat.
Cardinal Health was one of the Top 10 recommendations in the Sure Dividend Newsletter’s newest edition, which just came out last Sunday.
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Cardinal Health has increased its dividend payments for 31 consecutive years. The company is expected to generate 10%+ total returns over full economic cycles. It still appears undervalued and has a 2.4% dividend yield.