QS Research · Michael Burry's Scion Capital analyst template · 2006
CARDINAL HEALTH INC (CAH)
As of 2026-11-11 · 11/15 boxes filled from SEC filings and market data
Report price $276.79 (close 2026-11-10)
Conclusion: WATCH
Conviction low · base case -31% · downside -37% · upside -24%
CAH is a scaled but thin-margin distributor whose TTM net income of $1.82B supports a $63.98B market cap only at the current 29.7x P/E; at the peer-median 24.35x anchor the stock is $191.47 (-30.8%), and even the top peer 26.6x leaves it at about $209.53 (-24.3%). The 2026-11-05 Q1 FY2027 beat and raised FY2027 non-GAAP EPS guide are real, but they are non-GAAP, with Q1 GAAP operating earnings of $753M versus $1.001B non-GAAP and GMPD profit -28%, while no insider open-market buy appears in 76 Form 4s and executives sold $112.9M. On TTM net income down 25% and the code's compressed P/E, downside is -37.2%; with base -30.8% and upside -24.3%, the call is watch with low conviction. The business has grown revenue and cash flow, but the premium multiple is not protected by pricing power or a durable moat.
Key numbers
- Share price: $276.79
- Market cap: $63.98B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $257.75B
- EV / EBITDA (TTM): 18.4x
- P/E (TTM): 35.2x
- FCF yield: 7.7%
- Earnings-quality flags (TTM): none flagged
- P/E, operating (tax-normalized) (TTM): 29.7x
- EV / FCF (TTM): 13.8x
- Revenue growth (latest fiscal year): +14.2%
- ROIC (TTM): 129.8%
- WACC: 5.4%
- Economic profit spread: +124.4 pts
The 15 boxes
- ○ 1. Long-form business notes
The only supplied source is a six-year XBRL fact table, so it shows scale, reported operating profitability and cash flow but not segments, channels, unit economics or annual-report narrative. Revenue is $254.25B in FY2026 and $257.75B TTM to 2026-09-30, with operating income of $2.61B and $2.70B and operating cash flow of $5.17B and $5.60B in the same periods. The table also shows negative total equity (-$3.02B TTM) and diluted shares down to 231.00M TTM, but it does not explain the business mix or isolate one-off items.
- ✓ 2. Competitive advantage
Cardinal Health's advantage is scale in a price-led distribution business, not pricing power: FY2026 revenue of $254.25B produced gross profit of $9.77B (about 3.8% of revenue, my arithmetic), and the 10-K names national competitors McKesson and Cencora in Pharma and Medline and Owens & Minor in GMPD. Operating income still rose from $472.0M in FY2021 to $2.61B in FY2026 and $2.70B TTM while gross profit grew more slowly than revenue, so the gain came from the cost line rather than price. Cash generation is large (operating cash flow $5.17B FY2026, $5.60B TTM) but swings with working capital, and total equity is negative (-$2.88B FY2026, -$3.02B TTM), so equity-based returns cannot be read off these statements.
- ✓ 3. 10-Q takeaways
The Q1 FY2027 10-Q (quarter ended Sep 30, 2026) shows revenue +5% to $67.5B, gross margin +12% with rate +23 bps, non-GAAP operating earnings +17% to $1.0B, and non-GAAP diluted EPS +28% to $3.26. GAAP results include $47M net litigation recoveries; cash was $5.3B at Sep 30, 2026, operating cash flow was $1.4B after $385M opioid payments, and $500M was deployed for ASR repurchases. FY2027 non-GAAP diluted EPS guidance was raised to $12.80-$13.00; the provided risk-factor update did not include risk-factor text.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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