MCKESSON CORP (MCK) Stock Fundamental Analysis
NYSE:MCK - New York Stock Exchange, Inc. - US58155Q1031 - Common Stock - Currency: USD
MCK gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 102 industry peers in the Health Care Providers & Services industry. Both the profitability and the financial health of MCK get a neutral evaluation. Nothing too spectacular is happening here. MCK is showing excellent growth while it is valued at reasonable prices. Keep and eye on this one! With these ratings, MCK could be worth investigating further for growth investing!.
1. Profitability
1.1 Basic Checks
In the past year MCK was profitable.
In the past year MCK had a positive cash flow from operations.
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 better Return On Assets (4.39%) than 75.49% of its industry peers.
MCK's Return On Invested Capital of 30.35% is amongst the best of the industry. MCK outperforms 98.04% of its industry peers.
The Average Return On Invested Capital over the past 3 years for MCK is significantly above the industry average of 9.62%.
The 3 year average ROIC (24.61%) for MCK is below the current ROIC(30.35%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.39% | ||
| ROE | N/A | ||
| ROIC | 30.35% |
ROA(3y)4.85%
ROA(5y)1.87%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)24.61%
ROIC(5y)21.23%
1.3 Margins
Looking at the Profit Margin, with a value of 0.92%, MCK is in line with its industry, outperforming 54.90% of the companies in the same industry.
MCK's Profit Margin has improved in the last couple of years.
MCK has a Operating Margin of 1.40%. This is comparable to the rest of the industry: MCK outperforms 45.10% of its industry peers.
In the last couple of years the Operating Margin of MCK has remained more or less at the same level.
The Gross Margin of MCK (3.59%) is worse than 79.41% of its industry peers.
In the last couple of years the Gross Margin of MCK has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 1.4% | ||
| PM (TTM) | 0.92% | ||
| GM | 3.59% |
OM growth 3Y-0.01%
OM growth 5Y0.07%
PM growth 3Y29.56%
PM growth 5Y18.7%
GM growth 3Y-10.54%
GM growth 5Y-7.09%
2. Health
2.1 Basic Checks
MCK has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
The number of shares outstanding for MCK has been reduced compared to 1 year ago.
The number of shares outstanding for MCK has been reduced compared to 5 years ago.
The debt/assets ratio for MCK has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 5.94 indicates that MCK is not in any danger for bankruptcy at the moment.
MCK has a better Altman-Z score (5.94) than 87.25% of its industry peers.
MCK has a debt to FCF ratio of 1.08. This is a very positive value and a sign of high solvency as it would only need 1.08 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.08, MCK belongs to the top of the industry, outperforming 87.25% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 1.08 | ||
| Altman-Z | 5.94 |
ROIC/WACC3.46
WACC8.76%
2.3 Liquidity
A Current Ratio of 0.90 indicates that MCK may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.90, MCK is doing worse than 73.53% of the companies in the same industry.
A Quick Ratio of 0.53 indicates that MCK may have some problems paying its short term obligations.
MCK's Quick ratio of 0.53 is on the low side compared to the rest of the industry. MCK is outperformed by 86.27% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.9 | ||
| Quick Ratio | 0.53 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 20.71% over the past year.
The Earnings Per Share has been growing by 17.17% on average over the past years. This is quite good.
MCK shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 16.22%.
MCK shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 9.22% yearly.
EPS 1Y (TTM)20.71%
EPS 3Y11.79%
EPS 5Y17.17%
EPS Q2Q%63.75%
Revenue 1Y (TTM)16.22%
Revenue growth 3Y10.8%
Revenue growth 5Y9.22%
Sales Q2Q%18.95%
3.2 Future
The Earnings Per Share is expected to grow by 13.18% on average over the next years. This is quite good.
Based on estimates for the next years, MCK will show a quite strong growth in Revenue. The Revenue will grow by 8.06% on average per year.
EPS Next Y13.84%
EPS Next 2Y12.98%
EPS Next 3Y12.91%
EPS Next 5Y13.18%
Revenue Next Year11.98%
Revenue Next 2Y9.9%
Revenue Next 3Y9.06%
Revenue Next 5Y8.06%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 22.00, which indicates a rather expensive current valuation of MCK.
65.69% of the companies in the same industry are more expensive than MCK, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 26.32. MCK is around the same levels.
Based on the Price/Forward Earnings ratio of 19.33, the valuation of MCK can be described as rather expensive.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MCK indicates a somewhat cheap valuation: MCK is cheaper than 61.76% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 22.13. MCK is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22 | ||
| Fwd PE | 19.33 |
4.2 Price Multiples
MCK's Enterprise Value to EBITDA ratio is in line with the industry average.
Based on the Price/Free Cash Flow ratio, MCK is valued a bit cheaper than 69.61% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 17.43 | ||
| EV/EBITDA | 16.06 |
4.3 Compensation for Growth
The 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 12.91% in the coming years.
PEG (NY)1.59
PEG (5Y)1.28
EPS Next 2Y12.98%
EPS Next 3Y12.91%
5. Dividend
5.1 Amount
With a yearly dividend of 0.39%, MCK is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 2.41, MCK pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.40, MCK's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.39% |
5.2 History
The dividend of MCK is nicely growing with an annual growth rate of 10.13%!
MCK has paid a dividend for at least 10 years, which is a reliable track record.
MCK has decreased its dividend in the last 3 years.
Dividend Growth(5Y)10.13%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
10.47% 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.
DP10.47%
EPS Next 2Y12.98%
EPS Next 3Y12.91%
728.2
-2.6 (-0.36%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupHealth Care Equipment & Services
GICS IndustryHealth Care Providers & Services
Earnings (Last)
Earnings (Next)
Inst Owners89.63%
Inst Owner Change3.08%
Ins Owners0.08%
Ins Owner Change-11.62%
Market Cap91.11B
Analysts81.9
Price Target785.56 (7.88%)
Short Float %1.69%
Short Ratio1.89
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.39% |
Yearly Dividend2.71
Dividend Growth(5Y)10.13%
DP10.47%
Div Incr Years2
Div Non Decr Years2
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.74%
Min EPS beat(2)-0.54%
Max EPS beat(2)2.02%
EPS beat(4)3
Avg EPS beat(4)2.87%
Min EPS beat(4)-0.54%
Max EPS beat(4)8.24%
EPS beat(8)6
Avg EPS beat(8)4.96%
EPS beat(12)8
Avg EPS beat(12)4.52%
EPS beat(16)11
Avg EPS beat(16)7.86%
Revenue beat(2)0
Avg Revenue beat(2)-3.22%
Min Revenue beat(2)-4.64%
Max Revenue beat(2)-1.8%
Revenue beat(4)1
Avg Revenue beat(4)-1.88%
Min Revenue beat(4)-4.89%
Max Revenue beat(4)3.8%
Revenue beat(8)4
Avg Revenue beat(8)-0.48%
Revenue beat(12)6
Avg Revenue beat(12)-0.35%
Revenue beat(16)10
Avg Revenue beat(16)0.53%
PT rev (1m)6.64%
PT rev (3m)15.05%
EPS NQ rev (1m)-0.48%
EPS NQ rev (3m)-1.73%
EPS NY rev (1m)0%
EPS NY rev (3m)1.23%
Revenue NQ rev (1m)0.33%
Revenue NQ rev (3m)2.64%
Revenue NY rev (1m)0%
Revenue NY rev (3m)1.84%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22 | ||
| Fwd PE | 19.33 | ||
| P/S | 0.25 | ||
| P/FCF | 17.43 | ||
| P/OCF | 14.97 | ||
| P/B | N/A | ||
| P/tB | N/A | ||
| EV/EBITDA | 16.06 |
EPS(TTM)33.1
EY4.55%
EPS(NY)37.68
Fwd EY5.17%
FCF(TTM)41.77
FCFY5.74%
OCF(TTM)48.64
OCFY6.68%
SpS2869.88
BVpS-16.58
TBVpS-108.38
PEG (NY)1.59
PEG (5Y)1.28
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.39% | ||
| ROE | N/A | ||
| ROCE | 37.18% | ||
| ROIC | 30.35% | ||
| ROICexc | 52.37% | ||
| ROICexgc | N/A | ||
| OM | 1.4% | ||
| PM (TTM) | 0.92% | ||
| GM | 3.59% | ||
| FCFM | 1.46% |
ROA(3y)4.85%
ROA(5y)1.87%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)24.61%
ROIC(5y)21.23%
ROICexc(3y)38.33%
ROICexc(5y)31.81%
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)30.15%
ROCE(5y)26.01%
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3Y25.12%
ROICexc growth 5Y23.76%
OM growth 3Y-0.01%
OM growth 5Y0.07%
PM growth 3Y29.56%
PM growth 5Y18.7%
GM growth 3Y-10.54%
GM growth 5Y-7.09%
F-Score6
Asset Turnover4.78
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 1.08 | ||
| Debt/EBITDA | 0.79 | ||
| Cap/Depr | 135.06% | ||
| Cap/Sales | 0.24% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 107.34% | ||
| Profit Quality | 158.6% | ||
| Current Ratio | 0.9 | ||
| Quick Ratio | 0.53 | ||
| Altman-Z | 5.94 |
F-Score6
WACC8.76%
ROIC/WACC3.46
Cap/Depr(3y)111.68%
Cap/Depr(5y)95.54%
Cap/Sales(3y)0.22%
Cap/Sales(5y)0.23%
Profit Quality(3y)140.62%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)20.71%
EPS 3Y11.79%
EPS 5Y17.17%
EPS Q2Q%63.75%
EPS Next Y13.84%
EPS Next 2Y12.98%
EPS Next 3Y12.91%
EPS Next 5Y13.18%
Revenue 1Y (TTM)16.22%
Revenue growth 3Y10.8%
Revenue growth 5Y9.22%
Sales Q2Q%18.95%
Revenue Next Year11.98%
Revenue Next 2Y9.9%
Revenue Next 3Y9.06%
Revenue Next 5Y8.06%
EBIT growth 1Y28.16%
EBIT growth 3Y10.79%
EBIT growth 5Y9.29%
EBIT Next Year20.61%
EBIT Next 3Y11.73%
EBIT Next 5Y9.48%
FCF growth 1Y44.09%
FCF growth 3Y15.87%
FCF growth 5Y6.2%
OCF growth 1Y41.05%
OCF growth 3Y16.04%
OCF growth 5Y6.83%