Cencora (COR): Can the Earnings Champion Keep Its Streak Alive?

Cencora (NYSE: COR), a healthcare distribution giant, has quietly built one of the most consistent earnings surprise streaks in the market. With four consecutive quarters of beating estimates—including an 8.33% surprise in its May 2025 report—investors are now asking: Can this streak continue ahead of its August 6, 2025, earnings release? The answer, based on its track record, strategic moves, and Zacks' bullish metrics, is a resounding yes. Here's why.

The Case for Another Earnings Beat: A History of Outperformance

Cencora's recent earnings performance is nothing short of remarkable. Over the past two quarters, it has averaged an 8.4% earnings surprise rate, driven by two key factors:
1. U.S. Healthcare Solutions Dominance: This segment, accounting for 90% of revenue, grew 11.4% year-over-year in Q2 2025, fueled by soaring demand for GLP-1 class diabetes/weight loss drugs and specialty pharmaceuticals. The acquisition of Retina Consultants of America (RCA) in early 2025 added $37.5 million in revenue in Q2 alone, while boosting gross margins.
2. Cost Discipline: Operating expenses rose just 2% YoY in Q2, despite a 20.6% jump in gross profit. Litigation costs fell sharply compared to prior years, and share repurchases reduced outstanding shares by 3%, further amplifying EPS growth.

Zacks' Bullish Signals: Earnings ESP and Rank #2

Cencora's ability to outperform isn't just luck—it's statistically supported. Zacks Investment Research's Earnings ESP (Expected Surprise Percentage), which measures the likelihood of a beat based on analyst revisions, sits at +1.49%. This signals analysts have grown more optimistic about its near-term prospects. Combined with its Zacks Rank #2 (Buy), which considers earnings momentum and valuation, the data suggests an ~80% probability of another beat, according to Zacks' historical analysis.

Growth Drivers: Specialty Pharma and Strategic Acquisitions

The company's outperformance isn't a fluke—it's a deliberate strategy. Here's what's fueling its momentum:
1. GLP-1 Demand Surge: The diabetes/weight loss category is booming, with Cencora's U.S. network perfectly positioned to capture growth. Its partnerships with biotech firms and direct sales to physician practices are driving double-digit revenue gains in this segment.
2. RCA Integration: The RCA acquisition, finalized in January 2025, is already paying dividends. The deal added 150+ retina specialists to Cencora's network, boosting sales of high-margin specialty drugs. While integration costs (e.g., $37.5M in Q2) are temporary, the long-term revenue uplift is clear.
3. Share Buybacks: Cencora has reduced its share count by 3% year-over-year, directly boosting EPS. With $2.4B in cash and equivalents, it has the flexibility to continue repurchases if stock prices dip ahead of earnings.

Risks to Consider

No investment is risk-free. Cencora's international segment—which accounts for 10% of revenue—faces headwinds:
- European logistics operations are underperforming, with operating income down 17% YoY.
- Currency fluctuations in Turkey (a key market) and antitrust litigation costs could pressure margins.

However, the U.S. segment's dominance and Zacks' metrics suggest these issues are already priced into the stock.

Investment Thesis: Buy Ahead of the August Report

Cencora's stock has underperformed the broader market YTD, trading at a 15.8x forward P/E—a discount to peers like CVS Health (22x) and Walgreens (20x). With its August 6 report likely to deliver another beat (estimates currently sit at $4.10 EPS), the stock could rebound sharply.

Action Items for Investors:
1. Buy now: Accumulate shares ahead of the report, targeting $75–$80 (a 10–15% upside from current levels).
2. Set a stop-loss: Below $68 (20% below recent lows) to mitigate downside risk.
3. Monitor post-earnings guidance: Focus on U.S. segment growth and RCA integration updates during the August conference call.

Final Take

Cencora is a rare earnings machine in today's volatile market. Its U.S. healthcare dominance, Zacks-backed momentum, and undervalued stock make it a compelling near-term buy opportunity ahead of the August report. While international challenges linger, they're overshadowed by the company's ability to consistently beat expectations. For income investors, the $0.55 quarterly dividend (yielding 0.7%) adds a safety net.

The question isn't whether Cencora can keep its streak alive—it's whether you'll miss the rally if you wait.

Disclaimer: Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.