Jim Cramer's Charitable Trust Boosts Stake in Cardinal Health After Earnings Dip

Jim Cramer's Charitable Trust has increased its holdings in Cardinal Health, purchasing an additional 50 shares at around $199 each. This move raises the trust's total stake to 525 shares, boosting the stock's portfolio weight from 2.50% to 2.75%.

The decision follows a recent decline in Cardinal Health's stock price after its fiscal 2026 third-quarter earnings report, which included some disappointing elements. However, confidence remains high in the company's long-term earnings growth potential, supported by raised analyst forecasts for fiscal year 2027.

Why the Dip in Cardinal Health's Stock?

Cardinal Health's latest quarterly report revealed a revenue shortfall and $184 million in impairment charges related to its Navista and ION reporting units. These factors contributed to a post-earnings decline in the stock price, creating a buying opportunity for investors like Jim Cramer's Charitable Trust.

Analysts Raise Earnings Estimates Despite Challenges

Following the earnings release, many analysts increased their fiscal 2027 earnings per share (EPS) estimates for Cardinal Health. The consensus EPS forecast rose to $11.91 from approximately $11.60, signaling optimism about the company's ability to grow earnings in the low-to-mid teens over the long term.

Attractive Valuation Sparks Additional Investment

The combination of a lower stock price and higher earnings projections means Cardinal Health shares are now trading at about 16.5 times next 12 months' earnings estimates, down from roughly 20 times in early March. This valuation in the mid-teens P/E range is considered appealing by Jim Cramer's team, prompting the recent purchase.

What This Means for Investors

While the earnings report had some setbacks, the long-term growth story for Cardinal Health remains intact. The increased stake by a high-profile investor like Jim Cramer's Charitable Trust underscores confidence in the company's future prospects and may encourage other investors to consider the stock at its current valuation.

We're buying shares because both management and the analyst community are confident in Cardinal's continued ability to grow earnings per share in the low-to-mid teens over the long term.—Jeff Marks, Director of Portfolio Analysis, CNBC Investing Club