Walmart, Cardinal Health and Eli Lilly

For immediate release

Chicago, IL – August 19, 2024 – Today in Zacks’ Investment Ideas section we feature Walmart WMT, Cardinal Health CAH and Eli Lilly LLY.

3 companies report remarkable results: WMT, LLY CAH

The Q2 2024 earnings season is slowly coming to an end, as the vast majority of S&P 500 companies have already reported quarterly results. Looking ahead, earnings for the current period (Q3 2024) are expected to grow 4.3% on 4.6% higher revenues, representing a chain of consecutive positive periods.

Several companies were the focus of attention, including Walmart, Cardinal Health And Eli LillyAll three reported solid results and raised forecasts, and shares of all three companies trended higher following earnings releases.

Let’s take a closer look at each one.

Walmart shares continue to rise

In terms of headlines, retail giant Walmart reported 22% EPS growth on nearly 5% higher sales, both of which beat consensus expectations. The company has seen its stock consistently benefit from quarterly earnings throughout the year.

The company ran at full steam during the period, increasing its gross margin by 43 basis points and reporting a significant improvement in its operating profit. Importantly, e-commerce adoption continues to provide a tailwind, which was higher across all segments throughout the period.

Walmart’s digital efforts have been a major source of growth for the company and have delivered consistently solid results in recent periods. Global e-commerce sales grew 21%, with customers increasingly opting for pickup and delivery.

Walmart increased its net sales for fiscal 2025 and adjusted its operating income forecast after the release, which explains the positive reaction after the earnings release. The earnings forecast for the current fiscal year was already optimistic before the release, and expectations are likely to rise further after the updated forecast.

Cardinal Health generates record cash flows

Cardinal Health continued its positive earnings trend, beating the Zacks Consensus EPS Estimate by 7% and reporting revenue that was 2% above expectations. Earnings rose 29% and revenue rose 12% from the year-ago period.

In particular, the company’s ability to generate cash was significantly increased: CAH reported record operating cash flow and free cash flow of $3.8 billion and $3.9 billion, respectively.

CEO Jason Hollar said: “We generated robust cash flow, delivered continuous profit growth in the Pharmaceutical and Specialty Solutions segment and achieved significant improvements thanks to our GMPD Improvement Plan. We are entering the new fiscal year with momentum and confidence, which is reflected in our increased forecast for fiscal year 2025.’

The stock’s valuation is not exactly lavish, the current earnings multiple of 13.9 for the next 12 months is primarily in line with the historical average of the last few years. In addition, the current PEG ratio is 1.1, which shows that investors are paying a fair price for the projected growth.

Mounjaro demand for Eli Lilly is increasing rapidly

Eli Lilly shares were red hot in 2024 thanks to robust results driven by unabated demand, rising nearly 60% and comfortably outperforming the S&P 500. Share prices jumped after the latest release, with earnings and revenue rising 85% and 35%, respectively.

Following the release, the company increased its revenue forecast for the current year by a whopping $3 billion.

Eli Lilly’s story was driven by diabetes drug Mounjaro and weight-loss injectable Zepbound, which are seeing continued demand among consumers. Mounjaro sales rose 216% year-over-year, while Zepbound sales of $1.2 billion also reflected strong demand.

Earnings expectations have risen across the board following the release, and LLY carries a favorable Zacks Rank #2 (Buy).

Analysts’ sales expectations for the current fiscal year have also been adjusted accordingly. The now expected 45 billion US dollars indicate growth of 35 percent compared to the previous year.

Conclusion

The earnings season for the second quarter of 2024 is slowly coming to an end and only a small portion of the S&P 500 companies have yet to report their results.

So far, we have received positive feedback from several companies, including those listed above. All three have reported solid results and raised their guidance – an optimistic combination.

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