In an environment where many companies are missing their earnings estimates or guiding down due to external factors such as commodity exposure and currency impact, AmerisourceBergen Corporation (NYSE:ABC) just reported a pretty solid quarter, beating estimates by $0.17.
The company also upped its outlook for the year to $4.45-$4.55 from its prior view of $4.36-$4.50 and guided up revenues well above the Wall Street consensus. In fact, AmerisourceBergen is experiencing its best growth in 5 years.
AmerisourceBergen is a distributor of drugs and health supplies based in Chesterbrook, Pennsylvania. It runs 26 U.S. pharmaceutical distribution centers, 4 U.S. specialty distribution centers, and 2 Canadian distribution hubs, in order to maximize supply chain efficiency.
Much of the upward revision came about as a result of its announced acquisition of MWI Veterinary Supply (NASDAQ:MWIV) for $190 per share, which the company expects to add an additional $0.08 in earnings this year. I also was long the stock at the time the company announced the deal.
Three companies generate about 85-90% of all revenues in the wholesale drug distribution industry, AmerisourceBergen, Cardinal Health (NYSE:CAH), and McKesson Corp. (NYSE:MCK). While AmerisourceBergen is not the largest competitor, it does have the best revenue growth.

What are some of the other factors driving growth for AmerisourceBergen?
For one thing, AmerisourceBergen is reaping the benefits of its 10-year contract with Walgreens (NASDAQ:WBA) to provide branded and generic drug products. The company entered into a strategic agreement with Walgreens Boots Alliance in 2013 and clearly this relationship is paying off.
Yet another factor driving results is sales momentum related to the sale of products to treat hepatitis C. New hep-C treatments are now available from Gilead Sciences (NASDAQ:GILD), AbbVie (NYSE:ABBV), and Johnson & Johnson (NYSE:JNJ).
The stock hit a new high after rising on these strong earnings results.

ABC is bucking the trend of companies experiencing earnings difficulties and appears poised to outperform going forward.
So let’s take a closer look!

Data from Best Stocks Now app
AmerisourceBergen is a large-cap, $21 billion market capitalization company. Its risk profile is Conservative and I own it in my Conservative Growth portfolio.

Data from Best Stocks Now app
The company does not appear cheap on a valuation basis and rates a Value Grade of C+. But it is the growth story that makes the stock interesting. Its 5-year annual growth rate is 12.3%, but that growth is rapidly accelerating due to strong growth in generic drugs, its partnership with Walgreens, and new drug availability in the hep-C segment.

Data from Best Stocks Now app
ABC receives a Momentum Grade of A- and a Performance Grade of A. The stock has been a consistent outperformer relative to the Index. More recently, it is up more than 45% over the last year.

Data from Best Stocks Now app
The company is ranked #50 out of the more than 3,900 companies in the Best Stocks Now universe. It receives a rating of Strong Buy with a Stock Grade of A.
There are huge opportunities in the drug distribution segment given the growth in generics, new drug discoveries, and pharmacy alliances. AmerisourceBergen appears well positioned to capture these opportunities.