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. MCK has only an average score on both its financial health and profitability. 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 76.47% of its industry peers.
MCK has a Return On Invested Capital of 30.35%. This is amongst the best in 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 9.53%.
The last Return On Invested Capital (30.35%) for MCK is above the 3 year average (24.61%), which is a sign of increasing profitability.
| 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.
Looking at the Operating Margin, with a value of 1.40%, MCK is in line with its industry, outperforming 45.10% of the companies in the same industry.
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 80.39% of its industry peers.
MCK's Gross Margin has declined in the last couple of years.
| 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
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
An Altman-Z score of 5.93 indicates that MCK is not in any danger for bankruptcy at the moment.
MCK has a better Altman-Z score (5.93) than 89.22% 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 | 5.93 |
ROIC/WACC3.44
WACC8.82%
2.3 Liquidity
MCK has a Current Ratio of 0.90. 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's Current ratio of 0.90 is on the low side compared to the rest of the industry. MCK is outperformed by 76.47% of its industry peers.
MCK has a Quick Ratio of 0.90. 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's Quick ratio of 0.53 is on the low side compared to the rest of the industry. MCK is outperformed by 87.25% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.9 | ||
| Quick Ratio | 0.53 |
3. Growth
3.1 Past
MCK shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 20.71%, which is quite impressive.
MCK shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 17.17% yearly.
The Revenue has grown by 16.22% in the past year. This is quite good.
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
MCK is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 13.18% yearly.
MCK is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.02% yearly.
EPS Next Y13.84%
EPS Next 2Y12.98%
EPS Next 3Y12.62%
EPS Next 5Y13.18%
Revenue Next Year11.98%
Revenue Next 2Y9.9%
Revenue Next 3Y9.12%
Revenue Next 5Y8.02%
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
MCK is valuated rather expensively with a Price/Earnings ratio of 21.47.
Based on the Price/Earnings ratio, MCK is valued a bit cheaper than 64.71% of the companies in the same industry.
MCK is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 26.03, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 18.86, MCK is valued on the expensive side.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MCK indicates a somewhat cheap valuation: MCK is cheaper than 60.78% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.94. MCK is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.47 | ||
| Fwd PE | 18.86 |
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 a bit cheaper when compared to the industry. MCK is cheaper than 72.55% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 17.04 | ||
| EV/EBITDA | 15.88 |
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.
MCK's earnings are expected to grow with 12.62% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.55
PEG (5Y)1.25
EPS Next 2Y12.98%
EPS Next 3Y12.62%
5. Dividend
5.1 Amount
With a yearly dividend of 0.40%, MCK is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 2.46, MCK pays a bit more dividend than its industry peers.
With a Dividend Yield of 0.40, MCK pays less dividend than the S&P500 average, which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.4% |
5.2 History
On average, the dividend of MCK grows each year by 10.13%, 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)10.13%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
MCK pays out 10.47% 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.
DP10.47%
EPS Next 2Y12.98%
EPS Next 3Y12.62%
710.64
-8.09 (-1.13%)
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 Change2.81%
Ins Owners0.08%
Ins Owner Change-15.8%
Market Cap89.06B
Analysts81.82
Price Target736.62 (3.66%)
Short Float %1.74%
Short Ratio1.94
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.4% |
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)6.23%
PT rev (3m)9.51%
EPS NQ rev (1m)-0.49%
EPS NQ rev (3m)-1.25%
EPS NY rev (1m)1.34%
EPS NY rev (3m)1.12%
Revenue NQ rev (1m)1.92%
Revenue NQ rev (3m)2.3%
Revenue NY rev (1m)1.58%
Revenue NY rev (3m)2.78%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.47 | ||
| Fwd PE | 18.86 | ||
| P/S | 0.25 | ||
| P/FCF | 17.04 | ||
| P/OCF | 14.64 | ||
| P/B | N/A | ||
| P/tB | N/A | ||
| EV/EBITDA | 15.88 |
EPS(TTM)33.1
EY4.66%
EPS(NY)37.68
Fwd EY5.3%
FCF(TTM)41.7
FCFY5.87%
OCF(TTM)48.55
OCFY6.83%
SpS2864.84
BVpS-16.55
TBVpS-108.19
PEG (NY)1.55
PEG (5Y)1.25
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 | 5.93 |
F-Score6
WACC8.82%
ROIC/WACC3.44
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 3Y12.62%
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 3Y9.12%
Revenue Next 5Y8.02%
EBIT growth 1Y28.16%
EBIT growth 3Y10.79%
EBIT growth 5Y9.29%
EBIT Next Year17.26%
EBIT Next 3Y10.15%
EBIT Next 5Y10.78%
FCF growth 1Y44.09%
FCF growth 3Y15.87%
FCF growth 5Y6.2%
OCF growth 1Y41.05%
OCF growth 3Y16.04%
OCF growth 5Y6.83%