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 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 not overvalued while it is showing excellent growth. This is an interesting combination. With these ratings, MCK could be worth investigating further for growth investing!.
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.
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
MCK has a better Return On Assets (4.39%) than 75.49% of its industry peers.
Looking at the Return On Invested Capital, with a value of 30.35%, MCK belongs to the top of the industry, outperforming 98.04% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital 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
MCK has a Profit Margin (0.92%) which is comparable to the rest of the industry.
In the last couple of years the Profit Margin of MCK has grown nicely.
MCK has a Operating Margin (1.40%) which is comparable to the rest of the industry.
MCK's Operating Margin has been stable in the last couple of years.
MCK has a Gross Margin of 3.59%. This is in the lower half of the industry: MCK underperforms 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.
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
An Altman-Z score of 5.92 indicates that MCK is not in any danger for bankruptcy at the moment.
MCK has a better Altman-Z score (5.92) than 87.25% of its industry peers.
The Debt to FCF ratio of MCK is 1.08, which is an excellent value as it means it would take MCK, only 1.08 years of fcf income to pay off all of its debts.
MCK's Debt to FCF ratio of 1.08 is amongst the best of the industry. MCK outperforms 87.25% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 1.08 | ||
| Altman-Z | 5.92 |
ROIC/WACC3.45
WACC8.81%
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.
The Current ratio of MCK (0.90) is worse than 73.53% of its industry peers.
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.
MCK shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 17.17% yearly.
Looking at the last year, MCK shows a quite strong growth in Revenue. The Revenue has grown by 16.22% in the last year.
The Revenue has been growing by 9.22% on average over the past years. This is quite good.
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.
The Revenue is expected to grow by 8.06% on average over the next years. This is quite good.
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
Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of 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 21.68, which indicates a rather expensive current valuation of MCK.
68.63% 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 26.55. MCK is around the same levels.
Based on the Price/Forward Earnings ratio of 19.05, the valuation of MCK can be described as rather expensive.
62.75% 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 similar valuation than the S&P500 average which is at 22.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.68 | ||
| Fwd PE | 19.05 |
4.2 Price Multiples
MCK's Enterprise Value to EBITDA is on the same level as the industry average.
71.57% of the companies in the same industry are more expensive than MCK, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 17.18 | ||
| EV/EBITDA | 15.55 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
MCK has a very decent profitability rating, which may justify a higher PE ratio.
MCK's earnings are expected to grow with 12.91% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.57
PEG (5Y)1.26
EPS Next 2Y12.98%
EPS Next 3Y12.91%
5. Dividend
5.1 Amount
MCK has a yearly dividend return of 0.40%, which is pretty low.
Compared to an average industry Dividend Yield of 2.46, MCK pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.39, MCK's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.4% |
5.2 History
The dividend of MCK is nicely growing with an annual growth rate of 10.13%!
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)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%
717.76
+12.9 (+1.83%)
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 Change3.08%
Ins Owners0.08%
Ins Owner Change-2.07%
Market Cap89.80B
Analysts81.9
Price Target785.56 (9.45%)
Short Float %1.69%
Short Ratio1.89
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)7.61%
PT rev (3m)15.05%
EPS NQ rev (1m)-0.62%
EPS NQ rev (3m)-1.38%
EPS NY rev (1m)1.34%
EPS NY rev (3m)1.23%
Revenue NQ rev (1m)2.26%
Revenue NQ rev (3m)2.64%
Revenue NY rev (1m)-6.72%
Revenue NY rev (3m)1.84%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.68 | ||
| Fwd PE | 19.05 | ||
| P/S | 0.25 | ||
| P/FCF | 17.18 | ||
| P/OCF | 14.76 | ||
| P/B | N/A | ||
| P/tB | N/A | ||
| EV/EBITDA | 15.55 |
EPS(TTM)33.1
EY4.61%
EPS(NY)37.68
Fwd EY5.25%
FCF(TTM)41.77
FCFY5.82%
OCF(TTM)48.64
OCFY6.78%
SpS2869.88
BVpS-16.58
TBVpS-108.38
PEG (NY)1.57
PEG (5Y)1.26
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 | 5.92 |
F-Score6
WACC8.81%
ROIC/WACC3.45
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%