Is Cardinal Health (NYSE:CAH) low volatility a good sign for stockholders?


USD 66.68  1.11  1.64%   

Considering the 90-day investment horizon Cardinal Health is expected to generate 1.09 times more return on investment than the market. However, the company is 1.09 times more volatile than its market benchmark. It trades about 0.2 of its potential returns per unit of risk. The DOW is currently generating roughly 0.06 per unit of risk. Although many risk-takers are getting more into healthcare space, some of us are not very happy with Cardinal Health's current volatility. We will evaluate if the latest Cardinal Health price volatility suggests a bounce in September. Cardinal Health's very low volatility may have no significant impact on the stock's value as we estimate Cardinal Health as currently fairly valued. The real value, based on our calculations, is getting close to 61.50 per share.
Published over a month ago
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Cardinal Health has roughly 2.36 B in cash with 795 M of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 8.65.
Volatility is a rate at which the price of Cardinal Health or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Cardinal Health may increase or decrease. In other words, similar to Cardinal's beta indicator, it measures the risk of Cardinal Health and helps estimate the fluctuations that may happen in a short period of time. So if prices of Cardinal Health fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.

How important is Cardinal Health's Liquidity

Cardinal Health financial leverage refers to using borrowed capital as a funding source to finance Cardinal Health ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Cardinal Health financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Cardinal Health's total debt and its cash.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions.
It is good to see analyst projects for Cardinal Health, but it might be worth checking our own buy vs. sell analysis

Acquisition by Barg Steven of 466 shares of Cardinal Health subject to Rule 16b-3

Legal trades by Cardinal Health insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
Cardinal insider trading alert for grant of common shares by Barg Steven, the corporate stakeholder, on 19th of September 2022. This event was filed by Cardinal Health Inc with SEC on 2022-09-19. Statement of changes in beneficial ownership - SEC Form 4 [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

Breaking down Cardinal Health Indicators

This firm reported the last year's revenue of 176.85 B. Reported Net Loss for the year was (955 M) with profit before taxes, overhead, and interest of 6.97 B.
 2019 2020 2021 2022 (projected)
Receivables8.26 B9.1 B8.19 B7.29 B
Inventories13.2 B14.59 B13.13 B11.2 B

Are Cardinal Health technical ratios showing a throwback?

Current Sortino Ratio is up to 0.07. Price may drop again. Cardinal Health has relatively low volatility with skewness of -0.43 and kurtosis of -0.18. However, we advise all investors to independently investigate Cardinal Health to ensure all accessible information is consistent with the expectations about its upside potential and future expected returns. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Cardinal Health's stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Cardinal Health's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Cardinal Health Implied Volatility

Cardinal Health's implied volatility exposes the market's sentiment of Cardinal Health stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Cardinal Health's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Cardinal Health stock will not fluctuate a lot when Cardinal Health's options are near their expiration.

Our Final Takeaway

While some other entities under the medical distribution industry are still a bit expensive, Cardinal Health may offer a potential longer-term growth to stockholders. Taking everything into account, as of the 11th of August 2022, we believe Cardinal Health is currently fairly valued. It follows the market closely and projects very low chance of distress in the next two years. Our latest 90 days buy-or-sell advice on the company is Strong Buy.

Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Vlad Skutelnik do not own shares of Cardinal Health. Please refer to our Terms of Use for any information regarding our disclosure principles.

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