MCKESSON CORP (MCK) Stock Fundamental Analysis
NYSE:MCK - New York Stock Exchange, Inc. - US58155Q1031 - Common Stock - Currency: USD
Overall MCK gets a fundamental rating of 5 out of 10. We evaluated MCK against 106 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
In the past year MCK was profitable.
MCK had a positive operating cash flow in the past year.
MCK had positive earnings in 4 of the past 5 years.
In the past 5 years MCK always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 3.98%, MCK is in the better half of the industry, outperforming 69.81% of the companies in the same industry.
MCK has a Return On Invested Capital of 24.26%. This is amongst the best in the industry. MCK outperforms 97.17% of its industry peers.
The Average Return On Invested Capital over the past 3 years for MCK is significantly above the industry average of 8.79%.
The last Return On Invested Capital (24.26%) for MCK is above the 3 year average (21.89%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.98% | ||
| ROE | N/A | ||
| ROIC | 24.26% |
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 has a Profit Margin of 0.82%. This is comparable to the rest of the industry: MCK outperforms 53.77% of its industry peers.
MCK's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 1.28%, MCK is in line with its industry, outperforming 45.28% of the companies in the same industry.
MCK's Operating Margin has declined in the last couple of years.
MCK has a Gross Margin of 3.81%. This is amonst the worse of the industry: MCK underperforms 80.19% of its industry peers.
In the last couple of years the Gross Margin of MCK has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 1.28% | ||
| PM (TTM) | 0.82% | ||
| GM | 3.81% |
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.
Compared to 5 years ago, MCK has less shares outstanding
The debt/assets ratio for MCK has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 5.97 indicates that MCK is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 5.97, MCK belongs to the best of the industry, outperforming 91.51% of the companies in the same industry.
The Debt to FCF ratio of MCK is 4.90, which is a neutral value as it means it would take MCK, 4.90 years of fcf income to pay off all of its debts.
MCK's Debt to FCF ratio of 4.90 is fine compared to the rest of the industry. MCK outperforms 67.92% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 4.9 | ||
| Altman-Z | 5.97 |
ROIC/WACC2.81
WACC8.64%
2.3 Liquidity
MCK has a Current Ratio of 0.88. 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 Current ratio value of 0.88, MCK is not doing good in the industry: 79.25% of the companies in the same industry are doing better.
A Quick Ratio of 0.48 indicates that MCK may have some problems paying its short term obligations.
With a Quick ratio value of 0.48, MCK is not doing good in the industry: 87.74% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.88 | ||
| Quick Ratio | 0.48 |
3. Growth
3.1 Past
MCK shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 2.57%.
The Earnings Per Share has been growing by 15.07% on average over the past years. This is quite good.
The Revenue has grown by 14.29% in the past year. This is quite good.
The Revenue has been growing slightly by 7.59% on average over the past years.
EPS 1Y (TTM)2.57%
EPS 3Y16.77%
EPS 5Y15.07%
EPS Q2Q%3.75%
Revenue 1Y (TTM)14.29%
Revenue growth 3Y9.05%
Revenue growth 5Y7.59%
Sales Q2Q%17.8%
3.2 Future
MCK is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 14.65% yearly.
MCK is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 9.61% yearly.
EPS Next Y20.67%
EPS Next 2Y16.49%
EPS Next 3Y15.25%
EPS Next 5Y14.65%
Revenue Next Year16.15%
Revenue Next 2Y13.2%
Revenue Next 3Y11.28%
Revenue Next 5Y9.61%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
MCK is valuated rather expensively with a Price/Earnings ratio of 23.91.
Compared to the rest of the industry, the Price/Earnings ratio of MCK indicates a somewhat cheap valuation: MCK is cheaper than 61.32% of the companies listed in the same industry.
MCK is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.29, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 18.73, which indicates a rather expensive current valuation of MCK.
Based on the Price/Forward Earnings ratio, MCK is valued a bit cheaper than 68.87% of the companies in the same industry.
MCK is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 21.08, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.91 | ||
| Fwd PE | 18.73 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as MCK.
MCK's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 53.47 | ||
| EV/EBITDA | 18.11 |
4.3 Compensation for Growth
MCK's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The decent profitability rating of MCK may justify a higher PE ratio.
A more expensive valuation may be justified as MCK's earnings are expected to grow with 15.24% in the coming years.
PEG (NY)1.16
PEG (5Y)1.59
EPS Next 2Y16.49%
EPS Next 3Y15.25%
5. Dividend
5.1 Amount
MCK has a yearly dividend return of 0.41%, which is pretty low.
MCK's Dividend Yield is a higher than the industry average which is at 3.74.
Compared to an average S&P500 Dividend Yield of 2.52, MCK's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.41% |
5.2 History
The dividend of MCK is nicely growing with an annual growth rate of 9.65%!
MCK has paid a dividend for at least 10 years, which is a reliable track record.
The dividend of MCK decreased in the last 3 years.
Dividend Growth(5Y)9.65%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
11.89% of the earnings are spent on dividend by MCK. This is a low number and sustainable payout ratio.
The dividend of MCK is growing, but earnings are growing more, so the dividend growth is sustainable.
DP11.89%
EPS Next 2Y16.49%
EPS Next 3Y15.25%
697.08
+2.38 (+0.34%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupHealth Care Equipment & Services
GICS IndustryHealth Care Providers & Services
Earnings (Last)
Earnings (Next)
Inst Owners89.21%
Inst Owner Change0.02%
Ins Owners0.08%
Ins Owner Change-15.79%
Market Cap87.37B
Analysts82.73
Price Target693.44 (-0.52%)
Short Float %1.48%
Short Ratio2.29
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.41% |
Yearly Dividend2.36
Dividend Growth(5Y)9.65%
DP11.89%
Div Incr Years2
Div Non Decr Years2
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.62%
Min EPS beat(2)-0.54%
Max EPS beat(2)1.77%
EPS beat(4)2
Avg EPS beat(4)1.48%
Min EPS beat(4)-3.56%
Max EPS beat(4)8.24%
EPS beat(8)5
Avg EPS beat(8)4.61%
EPS beat(12)7
Avg EPS beat(12)3.99%
EPS beat(16)10
Avg EPS beat(16)7.68%
Revenue beat(2)1
Avg Revenue beat(2)1%
Min Revenue beat(2)-1.8%
Max Revenue beat(2)3.8%
Revenue beat(4)1
Avg Revenue beat(4)-1.89%
Min Revenue beat(4)-4.89%
Max Revenue beat(4)3.8%
Revenue beat(8)5
Avg Revenue beat(8)0.12%
Revenue beat(12)7
Avg Revenue beat(12)0.27%
Revenue beat(16)10
Avg Revenue beat(16)0.56%
PT rev (1m)1.56%
PT rev (3m)2.6%
EPS NQ rev (1m)0.06%
EPS NQ rev (3m)6.21%
EPS NY rev (1m)0.02%
EPS NY rev (3m)0.17%
Revenue NQ rev (1m)0.13%
Revenue NQ rev (3m)2.96%
Revenue NY rev (1m)0.03%
Revenue NY rev (3m)0.64%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.91 | ||
| Fwd PE | 18.73 | ||
| P/S | 0.25 | ||
| P/FCF | 53.47 | ||
| P/OCF | 35.17 | ||
| P/B | N/A | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.11 |
EPS(TTM)29.16
EY4.18%
EPS(NY)37.21
Fwd EY5.34%
FCF(TTM)13.04
FCFY1.87%
OCF(TTM)19.82
OCFY2.84%
SpS2749.41
BVpS-24.61
TBVpS-116.47
PEG (NY)1.16
PEG (5Y)1.59
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.98% | ||
| ROE | N/A | ||
| ROCE | 35.35% | ||
| ROIC | 24.26% | ||
| ROICexc | 26.25% | ||
| ROICexgc | 157.66% | ||
| OM | 1.28% | ||
| PM (TTM) | 0.82% | ||
| GM | 3.81% | ||
| FCFM | 0.47% |
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-Score5
Asset Turnover4.85
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 4.9 | ||
| Debt/EBITDA | 1.35 | ||
| Cap/Depr | 131.78% | ||
| Cap/Sales | 0.25% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 48.98% | ||
| Profit Quality | 57.82% | ||
| Current Ratio | 0.88 | ||
| Quick Ratio | 0.48 | ||
| Altman-Z | 5.97 |
F-Score5
WACC8.64%
ROIC/WACC2.81
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)2.57%
EPS 3Y16.77%
EPS 5Y15.07%
EPS Q2Q%3.75%
EPS Next Y20.67%
EPS Next 2Y16.49%
EPS Next 3Y15.25%
EPS Next 5Y14.65%
Revenue 1Y (TTM)14.29%
Revenue growth 3Y9.05%
Revenue growth 5Y7.59%
Sales Q2Q%17.8%
Revenue Next Year16.15%
Revenue Next 2Y13.2%
Revenue Next 3Y11.28%
Revenue Next 5Y9.61%
EBIT growth 1Y21.06%
EBIT growth 3Y2.16%
EBIT growth 5Y3.67%
EBIT Next Year20.21%
EBIT Next 3Y12.24%
EBIT Next 5Y10.98%
FCF growth 1Y-62.31%
FCF growth 3Y-2.4%
FCF growth 5Y0.84%
OCF growth 1Y-48.95%
OCF growth 3Y-1.7%
OCF growth 5Y1.34%