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US Equities · Finance research note

CAH — Cardinal Health

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 1.41%
Profit Margins 0.62%
Return on Assets 3.6%
Free Float 0.23B
Dividend Yield 0.86%
Short Int % Utilisation 3.9%

2.2 Growth

Metric Value
Revenue Growth 11.0%
Free Cash Flow 4.85B
EBITDA 13.97 (Ratio)
Enterprise Value 55.8B
EV/Revenue 0.22
EV/EBITDA 13.97

Revenue growth of 11.0% indicates steady, moderate expansion.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 66.37%
Risk / Std Dev (Ann.)* 29.76%
1-Year Price Return* 58.82%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $235.17
52-Week Range $145.87 – $258.30
Observation Count 251 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

DuPont Model Analysis

The DuPont model decomposes return on equity (ROE) into three operating and capital-structure drivers:

ROE = Net Margin × Asset Turnover × Equity Multiplier

The comparison uses the latest two comparable annual periods available for the issuer, with reported statement amounts shown in US$. Revenue and net income are income-statement flows; total assets and shareholders’ equity are year-end balance-sheet figures. This is a simplified year-end-balance DuPont comparison rather than an average-balance ROE calculation.

DuPont component Calculation FY2025 FY2024
Revenue Reported revenue $222.58B $226.83B
Net income Reported net income $1.56B $852.00M
Total assets Year-end reported balance $53.12B $45.12B
Shareholders’ equity Year-end reported balance $-2.78B $-3.21B
Net margin Net income ÷ revenue 0.70% 0.38%
Asset turnover Revenue ÷ total assets 4.1899x 5.0271x
Equity multiplier Total assets ÷ shareholders’ equity -19.1018x -14.0433x
ROE Net margin × asset turnover × equity multiplier -56.13% -26.52%

Source: Yahoo Finance annual statements. Values are based on the two latest comparable annual periods returned by the source; fiscal period labels use the statement period-end year.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $222.58B
Prior annual revenue $226.83B
EBIT $2.32B
Tax rate 25.30%
NOPAT = EBIT × (1 − tax rate) $1.73B
Forecast start-growth basis -1.87%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $1.73B
Add: depreciation & amortisation $790.00M
Less: capital expenditure -$547.00M
Less/(add): working-capital cash-flow movement -$523.00M
Current unlevered FCFF $1.45B

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 -1.87% $1.70B $775.20M -$536.75M -$513.20M $1.42B $1.38B
2 -0.78% $1.68B $769.16M -$591.71M -$509.20M $1.35B $1.22B
3 0.31% $1.69B $771.57M -$652.90M -$510.80M $1.30B $1.10B
4 1.41% $1.71B $782.42M -$722.25M -$517.98M $1.26B $994.98M
5 2.50% $1.76B $801.98M -$801.98M -$530.93M $1.23B $908.54M

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 0.52
Cost of equity 7.58%
Pre-tax cost of debt 3.16%
WACC 6.87%
WACC validation requires assumption review

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $28.72B
Implied terminal EV / EBITDA 9.11x
Terminal value as % of enterprise value 78.61%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $5.60B
Present value of terminal value $20.60B
Indicated enterprise value $26.20B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $26.20B
Less: gross interest-bearing debt $8.53B
Add: cash and equivalents $3.87B
Add: affiliate investments $0.00
Less: minority interests $147.00M
Indicated common equity value $21.40B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 242,000,000.00
Share-count basis reported diluted weighted-average shares
Current market price $235.25
DCF indicative value per share $88.42
Indicative value vs. market price -62.41%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range review required
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 4/4 evidenced checks
Lynch-inspired balance-and-growth checks 4/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:25:36.914859 UTC; latest reported fiscal period: 2025-06-30 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

2.7 Quantitative Factor Diagnostics

Model basis: Daily issuer USD excess returns are regressed in-sample using ordinary least squares on matching regional Fama–French factors. FF3 estimates market, size, and value loadings; FF5 adds profitability and investment. Coefficients are descriptive historical exposures, not predictions.

Estimation input Value
Regional factor set US
Factor-return currency USD
Issuer-return basis USD adjusted total return
Estimation window 2025-08-19 to 2026-06-30
Aligned daily observations 217
Minimum observation requirement 120
Currency conversion for HK listings not required

Fama–French Three-Factor and Five-Factor Results

Diagnostic FF3 FF5
Annualised alpha 70.69% 79.31%
Adjusted R² -0.01 -0.01
Annualised residual volatility 30.61% 30.53%
Factor loading (t-statistic) FF3 FF5
Market excess return (Mkt-RF) -0.06 (-0.36) 0.03 (0.17)
Size (SMB) 0.04 (0.15) 0.08 (0.32)
Value (HML) 0.12 (0.57) 0.07 (0.27)
Profitability (RMW) NM 0.23 (1.04)
Investment (CMA) NM 0.00 (0.00)

Definitions: Mkt-RF is the market return less the risk-free rate; SMB is small minus big; HML is high minus low book-to-market; RMW is robust minus weak profitability; CMA is conservative minus aggressive investment. Factor returns are sourced from the Kenneth R. French Data Library; issuer adjusted-return history is sourced from Yahoo Finance. For Hong Kong listings, adjusted HKD prices are converted into USD with daily USD/HKD closes before return calculation to match the USD regional factor basis. This is an in-sample historical regression; coefficients and t-statistics do not establish causation or predict future returns. This is research and analysis only, not personalized financial advice.

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