Cardinal Health (CAH:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Cardinal Health(CAH:NYS)

Healthcare:Medical Distribution

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$53.65 (USD) 07/11/2018

Weighted Valuation
$59.67 (USD)

Overall Rating
Undervalued by 11.2%

Valuation Models Analyst Consensus: $59.67 (USD)
(in order of importance)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (CAH:NYS USD)

Price 53.65
Range 52.59 – 53.70
52 week 48.40 – 75.23
Open 52.80
Vol / Avg. 2.9M/3.78M
Mkt cap 16.09B
P/E 66.23
Div/yield 1.86/0.04
EPS 0.81
Shares 299.86M
Beta 0.95

Company Description

Cardinal Health is a major distributor of pharmaceuticals and medical supplies to pharmacies and hospitals. It is also a major logistical partner for many branded manufacturers, providing market forecasting, product production, inventory efficiency, and distribution services to these players. Its largest retail pharmacy customer is CVS Health retail pharmacy operations.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for CAH:NYS

Using a discounted cash flow model we generated an intrinsic value of $191.45 (USD) for CAH:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

CAH:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $191.45 1% 5% 1% 5%
WACC (or Ke) 6.16 $244.61 $156.13
Terminal Growth Rate 1.20 $159.41 $239.68
Tax Rate 0.02 $201.44 $181.53
Cash Flow 3,203,722,175 $181.33 $201.58
Capital Expenditures -170,800,000 $190.98 $191.92
Long Term Debt 5,532,000,000 $192.38 $190.53

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $70.42 (USD) for CAH:NYS. We also generated a valuation of $97.20 (USD) using other metrics and comparables.
The comparable companies were AmerisourceBergen (ABC:NYS), Henry Schein (HSIC:NAS) and McKesson (MCK:NYS).

Company CAH:NYS End Date Value
Earnings/Share $0.81 (USD)
Book Value/Share $20.21 (USD)
Sales/Share $434.31 (USD)
Cash Flow/Share $8.79 (USD)
EBITDA/Share $9.24 (USD)
Price Based on Comps Adjustment Factor (%)
$66.43 (USD) -10.2
$88.25 (USD) -0.5
$178.27 (USD) -72.3
$85.19 (USD) -50.4
$150.61 (USD) -19.0
CAH:NYS Ratios Used Average Values ABC:NYS HSIC:NAS MCK:NYS
62.47 PE Ratio 82.01 18.03 29.97 198.03
2.50 PB Ratio 4.37 6.15 4.34 2.61
0.12 PS Ratio 0.41 0.12 0.99 0.12
5.76 PCF Ratio 12.95 9.16 22.04 7.66
7.71 EV to EBITDA 16.30 13.45 13.58 21.89

Multiples

Using a multiples approach we generated a valuation of  $73.33 (USD) for CAH:NYS

Company CAH:NYS End Date Value
Earnings/Share $0.81 (USD)
Book Value/Share $20.21 (USD)
Sales/Share $434.31 (USD)
Cash Flow/Share $8.79 (USD)
EBITDA/Share $9.24 (USD)
Price Based on Comps Adjustment Factor
$16.32 (USD) 0
$76.75 (USD) 0
$92.52 (USD) 0
$89.10 (USD) 0
$91.97 (USD) 0
Ratios Ratio Average
PE Ratio 20.15
PB Ratio 3.80
PS Ratio 0.21
PCF Ratio 10.14
EV to EBITDA 9.96

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  CAH:NYS for the last 10 years was  3.73

We ran the Adjusted Book Value for  CAH:NYS and generated a book value of  $19.61 (USD)
By multiplying these we get an adjusted valuation of  $73.14 (USD)

Analyst Data

In the Stockcalc database there are 3 analysts that provide a valuation for CAH:NYS. The 3 analysts have a concensus valuation for CAH:NYS for 2019 of $59.67 (USD).

CAH:NYS Cardinal Health

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
3 2 0 4.2000 Outperform 2018-11-6

Current Price: 53.65 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 4.89 5.38
# EPS Analysts 4 3
Mean Revenue 140,572.30 145,159.80
# Revenue Analysts 2 2
Mean Target Price 59.67
Mean Cash Flow 6.21 8.17
Mean EBITDA 2,951.40 3,018.50
Mean Net Income 1,467.10 1,625.80
Mean Debt Outstanding 4,026.00 4,026.00
Mean Tax Rate
Mean Growth Rate 59.29
Mean Capital Expenditure 538.10 577.90

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


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