MCKESSON CORP (MCK) Stock Fundamental Analysis
NYSE:MCK - New York Stock Exchange, Inc. - US58155Q1031 - Common Stock
We assign a fundamental rating of 5 out of 10 to MCK. MCK was compared to 108 industry peers in the Health Care Providers & Services industry. MCK has an average financial health and profitability rating. MCK is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
MCK had positive earnings in the past year.
MCK had a positive operating cash flow in the past year.
Of the past 5 years MCK 4 years were profitable.
In the past 5 years MCK always reported a positive cash flow from operatings.
1.2 Ratios
MCK has a Return On Assets of 3.50%. This is in the better half of the industry: MCK outperforms 72.90% of its industry peers.
MCK's Return On Invested Capital of 22.80% is amongst the best of the industry. MCK outperforms 98.13% of its industry peers.
The Average Return On Invested Capital over the past 3 years for MCK is significantly above the industry average of 8.27%.
The 3 year average ROIC (21.89%) for MCK is below the current ROIC(22.80%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.5% | ||
| ROE | N/A | ||
| ROIC | 22.8% |
ROA(3y)3.97%
ROA(5y)1.28%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)21.89%
ROIC(5y)18.52%
1.3 Margins
MCK's Profit Margin of 0.77% is in line compared to the rest of the industry. MCK outperforms 58.88% of its industry peers.
In the last couple of years the Profit Margin of MCK has grown nicely.
MCK has a Operating Margin (1.15%) which is comparable to the rest of the industry.
MCK's Operating Margin has declined in the last couple of years.
Looking at the Gross Margin, with a value of 3.94%, MCK is doing worse than 81.31% of the companies in the same industry.
In the last couple of years the Gross Margin of MCK has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 1.15% | ||
| PM (TTM) | 0.77% | ||
| GM | 3.94% |
OM growth 3Y-6.32%
OM growth 5Y-3.65%
PM growth 3YN/A
PM growth 5Y127.73%
GM growth 3Y-7.56%
GM growth 5Y-5.78%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), MCK is creating value.
MCK has less shares outstanding than it did 1 year ago.
MCK has less shares outstanding than it did 5 years ago.
The debt/assets ratio for MCK has been reduced compared to a year ago.
2.2 Solvency
MCK has an Altman-Z score of 5.55. This indicates that MCK is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 5.55, MCK belongs to the top of the industry, outperforming 87.85% of the companies in the same industry.
The Debt to FCF ratio of MCK is 1.34, which is an excellent value as it means it would take MCK, only 1.34 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.34, MCK belongs to the top of the industry, outperforming 89.72% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 1.34 | ||
| Altman-Z | 5.55 |
ROIC/WACC2.58
WACC8.84%
2.3 Liquidity
MCK has a Current Ratio of 0.91. This is a bad value and indicates that MCK is not financially healthy enough and could expect problems in meeting its short term obligations.
MCK has a Current ratio of 0.91. This is in the lower half of the industry: MCK underperforms 79.44% of its industry peers.
MCK has a Quick Ratio of 0.91. This is a bad value and indicates that MCK is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Quick ratio value of 0.50, MCK is not doing good in the industry: 89.72% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.91 | ||
| Quick Ratio | 0.5 |
3. Growth
3.1 Past
MCK shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 4.64%.
MCK shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 15.07% yearly.
MCK shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 13.43%.
Measured over the past years, MCK shows a small growth in Revenue. The Revenue has been growing by 7.59% on average per year.
EPS 1Y (TTM)4.64%
EPS 3Y16.77%
EPS 5Y15.07%
EPS Q2Q%13.48%
Revenue 1Y (TTM)13.43%
Revenue growth 3Y9.05%
Revenue growth 5Y7.59%
Sales Q2Q%21.29%
3.2 Future
Based on estimates for the next years, MCK will show a quite strong growth in Earnings Per Share. The EPS will grow by 15.08% on average per year.
MCK is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.44% yearly.
EPS Next Y20.46%
EPS Next 2Y16.31%
EPS Next 3Y14.58%
EPS Next 5Y15.08%
Revenue Next Year15.41%
Revenue Next 2Y12.42%
Revenue Next 3Y10.58%
Revenue Next 5Y8.44%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 20.30, which indicates a rather expensive current valuation of MCK.
Based on the Price/Earnings ratio, MCK is valued a bit cheaper than 71.03% of the companies in the same industry.
MCK is valuated rather cheaply when we compare the Price/Earnings ratio to 28.29, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 15.80, the valuation of MCK can be described as correct.
73.83% of the companies in the same industry are more expensive than MCK, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 24.44. MCK is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.3 | ||
| Fwd PE | 15.8 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of MCK is on the same level as its industry peers.
Based on the Price/Free Cash Flow ratio, MCK is valued a bit cheaper than 76.64% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 17.31 | ||
| EV/EBITDA | 17.62 |
4.3 Compensation for Growth
MCK's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
MCK has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as MCK's earnings are expected to grow with 14.58% in the coming years.
PEG (NY)0.99
PEG (5Y)1.35
EPS Next 2Y16.31%
EPS Next 3Y14.58%
5. Dividend
5.1 Amount
MCK has a yearly dividend return of 0.48%, which is pretty low.
MCK's Dividend Yield is a higher than the industry average which is at 2.87.
Compared to an average S&P500 Dividend Yield of 2.28, MCK's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.48% |
5.2 History
On average, the dividend of MCK grows each year by 9.65%, which is quite nice.
MCK has been paying a dividend for at least 10 years, so it has a reliable track record.
MCK has decreased its dividend in the last 3 years.
Dividend Growth(5Y)9.65%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
MCK pays out 12.89% of its income as dividend. This is a sustainable payout ratio.
The dividend of MCK is growing, but earnings are growing more, so the dividend growth is sustainable.
DP12.89%
EPS Next 2Y16.31%
EPS Next 3Y14.58%
MCKESSON CORP
NYSE:MCK (1/21/2025, 8:13:24 PM)
After market: 586.08 0 (0%)586.08
-6.49 (-1.1%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupHealth Care Equipment & Services
GICS IndustryHealth Care Providers & Services
Earnings (Last)
Earnings (Next)
Inst Owners88.45%
Inst Owner Change-0.49%
Ins Owners0.08%
Ins Owner Change-3.26%
Market Cap74.40B
Analysts82.73
Price Target675.87 (15.32%)
Short Float %1.24%
Short Ratio1.85
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.48% |
Yearly Dividend2.36
Dividend Growth(5Y)9.65%
DP12.89%
Div Incr Years2
Div Non Decr Years2
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)5.01%
Min EPS beat(2)1.77%
Max EPS beat(2)8.24%
EPS beat(4)3
Avg EPS beat(4)3.8%
Min EPS beat(4)-3.56%
Max EPS beat(4)8.73%
EPS beat(8)6
Avg EPS beat(8)5.62%
EPS beat(12)8
Avg EPS beat(12)5.06%
EPS beat(16)11
Avg EPS beat(16)8.36%
Revenue beat(2)1
Avg Revenue beat(2)-0.54%
Min Revenue beat(2)-4.89%
Max Revenue beat(2)3.8%
Revenue beat(4)2
Avg Revenue beat(4)-0.73%
Min Revenue beat(4)-4.89%
Max Revenue beat(4)3.8%
Revenue beat(8)5
Avg Revenue beat(8)0.14%
Revenue beat(12)8
Avg Revenue beat(12)0.6%
Revenue beat(16)11
Avg Revenue beat(16)0.7%
PT rev (1m)2.54%
PT rev (3m)9.13%
EPS NQ rev (1m)0%
EPS NQ rev (3m)3.92%
EPS NY rev (1m)0%
EPS NY rev (3m)1.55%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.3%
Revenue NY rev (1m)0%
Revenue NY rev (3m)2.29%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.3 | ||
| Fwd PE | 15.8 | ||
| P/S | 0.23 | ||
| P/FCF | 17.31 | ||
| P/OCF | 14.57 | ||
| P/B | N/A | ||
| P/tB | N/A | ||
| EV/EBITDA | 17.62 |
EPS(TTM)28.87
EY4.93%
EPS(NY)37.09
Fwd EY6.33%
FCF(TTM)33.87
FCFY5.78%
OCF(TTM)40.23
OCFY6.86%
SpS2601.13
BVpS-23.77
TBVpS-115.62
PEG (NY)0.99
PEG (5Y)1.35
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.5% | ||
| ROE | N/A | ||
| ROCE | 27.83% | ||
| ROIC | 22.8% | ||
| ROICexc | 27.93% | ||
| ROICexgc | N/A | ||
| OM | 1.15% | ||
| PM (TTM) | 0.77% | ||
| GM | 3.94% | ||
| FCFM | 1.3% |
ROA(3y)3.97%
ROA(5y)1.28%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)21.89%
ROIC(5y)18.52%
ROICexc(3y)31.11%
ROICexc(5y)25.97%
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)26.72%
ROCE(5y)22.6%
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3Y14.1%
ROICexc growth 5Y16.79%
OM growth 3Y-6.32%
OM growth 5Y-3.65%
PM growth 3YN/A
PM growth 5Y127.73%
GM growth 3Y-7.56%
GM growth 5Y-5.78%
F-Score6
Asset Turnover4.56
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 1.34 | ||
| Debt/EBITDA | 1.28 | ||
| Cap/Depr | 124.12% | ||
| Cap/Sales | 0.24% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 114.71% | ||
| Profit Quality | 169.52% | ||
| Current Ratio | 0.91 | ||
| Quick Ratio | 0.5 | ||
| Altman-Z | 5.55 |
F-Score6
WACC8.84%
ROIC/WACC2.58
Cap/Depr(3y)90.12%
Cap/Depr(5y)79.5%
Cap/Sales(3y)0.21%
Cap/Sales(5y)0.22%
Profit Quality(3y)188.26%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)4.64%
EPS 3Y16.77%
EPS 5Y15.07%
EPS Q2Q%13.48%
EPS Next Y20.46%
EPS Next 2Y16.31%
EPS Next 3Y14.58%
EPS Next 5Y15.08%
Revenue 1Y (TTM)13.43%
Revenue growth 3Y9.05%
Revenue growth 5Y7.59%
Sales Q2Q%21.29%
Revenue Next Year15.41%
Revenue Next 2Y12.42%
Revenue Next 3Y10.58%
Revenue Next 5Y8.44%
EBIT growth 1Y-11.23%
EBIT growth 3Y2.16%
EBIT growth 5Y3.67%
EBIT Next Year22.48%
EBIT Next 3Y12.59%
EBIT Next 5Y11.15%
FCF growth 1Y10.74%
FCF growth 3Y-2.4%
FCF growth 5Y0.84%
OCF growth 1Y17.13%
OCF growth 3Y-1.7%
OCF growth 5Y1.34%