My Snapshot of the Week gives you a short summary of a stock that currently looks particularly interesting to me.
This week’s focus: US healthcare provider Cardinal Health.
My Stock Screener
I use my own stock screener to identify companies that perfectly fit my investment strategy. It determines the attractiveness of a stock based on 4 assessment criteria and finally leads to my personal screening result, which I call Dividend Diary Score.
More information about my stock screening process can be found here:
Companies with a Dividend Diary Score of
- less than -10 rarely make it on my watchlist
- between -10 and +10 qualify itself for my stock screener
- higher than +10 probably end up in my portfolio.
Cardinal Health in my Stock Screener
Cardinal Health currently scores a negative Dividend Diary Score of -31.8 points.
The main reason for the modest screening result are the recurring earnings declines over the entire valuation period:
- 2005: -28%
- 2008: -25%
- 2010: -44%
- 2013: -68%
In this context, the last financial year was particularly negative (-80%) due to a $ 1.4 billion goodwill impairment charge.
The fact that the stock currently looks relatively cheap, doesn’t compensate for the lack of earnings consistency or the almost non-existing profit growth since the mid-2000s.
However, Cardinal Health’s dividend track record is really impressive. The company steadily increased its dividend since 2004. Meanwhile, its dividend yield is 3.9%. However, due to the recent impairment charge, the payout ratio was also well above 100% in 2018.
Conclusion: Cardinal Health doesn’t make it on my Watchlist (yet)
Overall, Cardinal Health is no candidate for my watchlist.
The US healthcare provider’s screening result currently doesn’t justify a purchase. This is all the more true, as the health care industry is already fairly present in my portfolio (including Fresenius, Gilead Sciences and Novo Nordisk).
However, if current earnings forecasts prove to be true, Cardinal Health’s stock would perform significantly better in my stock screener in the days to come. In this way, the company could still make it on my watchlist in the medium term.
If you liked this week’s snapshot, you’re welcome to check out my stock series. Here you can find all companies that already went through my stock screener.