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 103 industry peers in the Health Care Providers & Services industry. MCK has only an average score on both its financial health and profitability. MCK is not overvalued while it is showing excellent growth. This is an interesting combination. These ratings could make MCK a good candidate for growth investing.
1. Profitability
1.1 Basic Checks
In the past year MCK was profitable.
MCK had a positive operating cash flow in the past year.
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
With a decent Return On Assets value of 4.39%, MCK is doing good in the industry, outperforming 75.73% of the companies in the same industry.
MCK's Return On Invested Capital of 30.35% is amongst the best of the industry. MCK outperforms 98.06% of its industry peers.
MCK had an Average Return On Invested Capital over the past 3 years of 24.61%. This is significantly above the industry average of 9.71%.
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 of 1.40%. This is comparable to the rest of the industry: MCK outperforms 45.63% of its industry peers.
MCK's Operating Margin has been stable in the last couple of years.
MCK's Gross Margin of 3.59% is on the low side compared to the rest of the industry. MCK is outperformed by 80.58% 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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so MCK is creating value.
The number of shares outstanding for MCK has been reduced compared to 1 year ago.
MCK has less shares outstanding than it did 5 years ago.
MCK has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 5.92 indicates that MCK is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 5.92, MCK belongs to the best of the industry, outperforming 86.41% of the companies in the same industry.
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.
With an excellent Debt to FCF ratio value of 1.08, MCK belongs to the best of the industry, outperforming 86.41% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | N/A | ||
| Debt/FCF | 1.08 | ||
| Altman-Z | 5.92 |
ROIC/WACC3.51
WACC8.65%
2.3 Liquidity
A Current Ratio of 0.90 indicates that MCK may have some problems paying its short term obligations.
The Current ratio of MCK (0.90) is worse than 74.76% 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.
Looking at the Quick ratio, with a value of 0.53, MCK is doing worse than 87.38% of the companies in the same industry.
| 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.
MCK shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 16.22%.
Measured over the past years, MCK shows a quite strong growth in Revenue. The Revenue has been growing by 9.22% on average per year.
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.
MCK is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.06% yearly.
EPS Next Y13.91%
EPS Next 2Y13.03%
EPS Next 3Y12.85%
EPS Next 5Y13.18%
Revenue Next Year11.98%
Revenue Next 2Y9.9%
Revenue Next 3Y9.07%
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 21.73, which indicates a rather expensive current valuation of MCK.
Based on the Price/Earnings ratio, MCK is valued a bit cheaper than 66.02% of the companies in the same industry.
When comparing the Price/Earnings ratio of MCK to the average of the S&P500 Index (27.45), we can say MCK is valued slightly cheaper.
A Price/Forward Earnings ratio of 19.08 indicates a rather expensive valuation of MCK.
63.11% of the companies in the same industry are more expensive than MCK, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.90, MCK is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.73 | ||
| Fwd PE | 19.08 |
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.
69.90% 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 | 17.22 | ||
| EV/EBITDA | 15.56 |
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 12.85% in the coming years.
PEG (NY)1.56
PEG (5Y)1.27
EPS Next 2Y13.03%
EPS Next 3Y12.85%
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 2.37, MCK pays a bit more dividend than its industry peers.
With a Dividend Yield of 0.39, MCK pays less dividend than the S&P500 average, which is at 2.42.
| 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 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
MCK pays out 10.47% of its income as dividend. This is a sustainable payout ratio.
MCK's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP10.47%
EPS Next 2Y13.03%
EPS Next 3Y12.85%
719.3
+13.85 (+1.96%)
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-12.78%
Market Cap89.99B
Analysts81.9
Price Target797.01 (10.8%)
Short Float %1.61%
Short Ratio2.17
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)8.2%
PT rev (3m)15.35%
EPS NQ rev (1m)-0.48%
EPS NQ rev (3m)-1.6%
EPS NY rev (1m)0.06%
EPS NY rev (3m)1.32%
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 | 21.73 | ||
| Fwd PE | 19.08 | ||
| P/S | 0.25 | ||
| P/FCF | 17.22 | ||
| P/OCF | 14.79 | ||
| P/B | N/A | ||
| P/tB | N/A | ||
| EV/EBITDA | 15.56 |
EPS(TTM)33.1
EY4.6%
EPS(NY)37.7
Fwd EY5.24%
FCF(TTM)41.77
FCFY5.81%
OCF(TTM)48.64
OCFY6.76%
SpS2869.88
BVpS-16.58
TBVpS-108.38
PEG (NY)1.56
PEG (5Y)1.27
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
WACC8.65%
ROIC/WACC3.51
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 Y13.91%
EPS Next 2Y13.03%
EPS Next 3Y12.85%
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 3Y9.07%
Revenue Next 5Y8.06%
EBIT growth 1Y28.16%
EBIT growth 3Y10.79%
EBIT growth 5Y9.29%
EBIT Next Year20.61%
EBIT Next 3Y12%
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%