MCKESSON CORP (MCK) Stock Fundamental Analysis
NYSE:MCK - New York Stock Exchange, Inc. - US58155Q1031 - Common Stock - Currency: USD
We assign a fundamental rating of 6 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.
In the past year MCK had a positive cash flow from operations.
Of the past 5 years MCK 4 years were profitable.
Each year in the past 5 years MCK had a positive operating cash flow.
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 72.90% of the companies in the same industry.
The Return On Invested Capital of MCK (24.26%) is better than 98.13% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for MCK is significantly above the industry average of 8.14%.
The 3 year average ROIC (21.89%) for MCK is below the current ROIC(24.26%), indicating increased profibility in the last year.
| 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 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 (1.28%) which is comparable to the rest of the industry.
MCK's Operating Margin has declined in the last couple of years.
MCK has a worse Gross Margin (3.81%) than 82.24% of its industry peers.
MCK's Gross Margin has declined in the last couple of years.
| 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.
The number of shares outstanding for MCK has been reduced compared to 1 year ago.
Compared to 5 years ago, MCK has less shares outstanding
MCK has a better debt/assets ratio than last year.
2.2 Solvency
MCK has an Altman-Z score of 5.88. This indicates that MCK is financially healthy and has little risk of bankruptcy at the moment.
MCK has a Altman-Z score of 5.88. This is amongst the best in the industry. MCK outperforms 88.78% of its industry peers.
MCK has a debt to FCF ratio of 4.90. This is a neutral value as MCK would need 4.90 years to pay back of all of its debts.
The Debt to FCF ratio of MCK (4.90) is better than 77.57% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 4.9 | ||
| Altman-Z | 5.88 |
ROIC/WACC2.78
WACC8.74%
2.3 Liquidity
A Current Ratio of 0.88 indicates that MCK may have some problems paying its short term obligations.
With a Current ratio value of 0.88, MCK is not doing good in the industry: 80.37% 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.
MCK has a worse Quick ratio (0.48) than 91.59% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.88 | ||
| Quick Ratio | 0.48 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 2.57% over the past year.
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
Based on estimates for the next years, MCK will show a quite strong growth in Earnings Per Share. The EPS will grow by 14.65% on average per year.
MCK is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 9.19% yearly.
EPS Next Y20.67%
EPS Next 2Y16.58%
EPS Next 3Y15.32%
EPS Next 5Y14.65%
Revenue Next Year15.47%
Revenue Next 2Y12.54%
Revenue Next 3Y10.64%
Revenue Next 5Y9.19%
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
With a Price/Earnings ratio of 20.50, MCK is valued on the expensive side.
Based on the Price/Earnings ratio, MCK is valued a bit cheaper than the industry average as 70.09% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 29.63, MCK is valued a bit cheaper.
The Price/Forward Earnings ratio is 16.04, which indicates a correct valuation of MCK.
73.83% of the companies in the same industry are more expensive than MCK, based on the Price/Forward Earnings ratio.
MCK's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 22.68.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.5 | ||
| Fwd PE | 16.04 |
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 61.68% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 45.85 | ||
| EV/EBITDA | 15.79 |
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.
The decent profitability rating of MCK may justify a higher PE ratio.
MCK's earnings are expected to grow with 15.32% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.99
PEG (5Y)1.36
EPS Next 2Y16.58%
EPS Next 3Y15.32%
5. Dividend
5.1 Amount
MCK has a yearly dividend return of 0.47%, which is pretty low.
Compared to an average industry Dividend Yield of 2.95, MCK pays a bit more dividend than its industry peers.
With a Dividend Yield of 0.47, MCK pays less dividend than the S&P500 average, which is at 2.29.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.47% |
5.2 History
The dividend of MCK is nicely growing with an annual growth rate of 9.65%!
MCK has been paying a dividend for at least 10 years, so it has 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
MCK pays out 11.89% 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.
DP11.89%
EPS Next 2Y16.58%
EPS Next 3Y15.32%
597.71
-5.8 (-0.96%)
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-3.91%
Ins Owners0.08%
Ins Owner Change-0.65%
Market Cap74.91B
Analysts82.73
Price Target672.67 (12.54%)
Short Float %1.19%
Short Ratio1.93
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.47% |
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)-0.47%
PT rev (3m)13.02%
EPS NQ rev (1m)6.16%
EPS NQ rev (3m)14.05%
EPS NY rev (1m)0.17%
EPS NY rev (3m)1.03%
Revenue NQ rev (1m)2.83%
Revenue NQ rev (3m)2.65%
Revenue NY rev (1m)0.05%
Revenue NY rev (3m)0.58%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 20.5 | ||
| Fwd PE | 16.04 | ||
| P/S | 0.22 | ||
| P/FCF | 45.85 | ||
| P/OCF | 30.16 | ||
| P/B | N/A | ||
| P/tB | N/A | ||
| EV/EBITDA | 15.79 |
EPS(TTM)29.16
EY4.88%
EPS(NY)37.26
Fwd EY6.23%
FCF(TTM)13.04
FCFY2.18%
OCF(TTM)19.82
OCFY3.32%
SpS2749.41
BVpS-24.61
TBVpS-116.47
PEG (NY)0.99
PEG (5Y)1.36
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 | 5.88 |
F-Score5
WACC8.74%
ROIC/WACC2.78
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 2Y16.58%
EPS Next 3Y15.32%
EPS Next 5Y14.65%
Revenue 1Y (TTM)14.29%
Revenue growth 3Y9.05%
Revenue growth 5Y7.59%
Sales Q2Q%17.8%
Revenue Next Year15.47%
Revenue Next 2Y12.54%
Revenue Next 3Y10.64%
Revenue Next 5Y9.19%
EBIT growth 1Y21.06%
EBIT growth 3Y2.16%
EBIT growth 5Y3.67%
EBIT Next Year22.72%
EBIT Next 3Y12.58%
EBIT Next 5Y11.15%
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%