Cardinal Health

Methodology

Cardinal Health's pharmaceutical and medical product distribution generates stable revenue from essential healthcare supply chain services, though margins are thin and competition intense. The company's scale provides advantages, but customer concentration and pricing pressures limit profitability growth. This calculation works reasonably for Cardinal during stable periods, though opioid-related litigation costs and generic drug pricing dynamics created significant recent volatility.

Methodology

Cardinal Health's PEG ratio often appears attractive given low valuations, but this reflects structural challenges in pharmaceutical distribution including margin pressure and litigation overhangs. The company's limited growth potential and capital-intensive distribution model justify lower multiples than higher-margin healthcare businesses. A low PEG may reflect appropriate skepticism about growth prospects in a commoditized distribution business rather than deep value.

Methodology

Cardinal Health's dividend yield (typically 3.0-5.0%) provides meaningful return for investors in this low-growth distribution business. The company has maintained dividends through margin pressures and litigation challenges, though payout sustainability requires monitoring given competitive dynamics. PEGY is relevant for Cardinal investors seeking healthcare exposure with income, but dividend coverage and the trajectory of pharmaceutical distribution margins should be carefully assessed.