McKesson logged a -4.1% change during today's evening session, and is now trading at a price of $441.68 per share.
McKesson returned gains of 25.1% last year, with its stock price reaching a high of $476.35 and a low of $331.75. Over the same period, the stock outperformed the S&P 500 index by 4.3%. More recently, the company's 50-day average price was $456.18. McKesson Corporation provides healthcare services in the United States and internationally. Based in Irving, TX, the large-cap Health Care company has 45,000 full time employees. McKesson has offered a 0.5% dividend yield over the last 12 months.
Growing Revenues With a Flat Capital Expenditure Trend:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $208,357 | $214,319 | $231,051 | $238,228 | $263,966 | $276,711 |
| Revenue Growth | n/a | 2.86% | 7.81% | 3.11% | 10.8% | 4.83% |
| Operating Margins | 0% | 0% | 1% | -2% | 1% | 2% |
| Net Margins | 0% | 0% | 0% | 0% | 0% | 1% |
| Net Income (MM) | $297 | $255 | $1,126 | $199 | $1,292 | $3,725 |
| Net Interest Expense (MM) | $283 | $264 | $37 | $223 | $259 | $497 |
| Depreciation & Amort. (MM) | $303 | $317 | $321 | $321 | $279 | $248 |
| Earnings Per Share | $0.32 | $0.17 | $4.95 | -$28.26 | $7.23 | $25.03 |
| EPS Growth | n/a | -46.88% | 2811.76% | -670.91% | 125.58% | 246.2% |
| Diluted Shares (MM) | 209 | 197 | 182 | 161 | 154 | 142 |
| Free Cash Flow (MM) | $3,940 | $3,610 | $4,012 | $4,091 | $4,046 | $4,769 |
| Capital Expenditures (MM) | $405 | $426 | $362 | $451 | $388 | $390 |
| Current Ratio | 1.02 | 0.98 | 1.01 | 0.98 | 0.93 | 0.93 |
| Total Debt (MM) | $8,928 | $10,597 | $7,259 | $5,978 | $5,881 | $5,613 |
| Net Debt / EBITDA | 6.65 | 7.09 | 1.31 | -0.67 | 1.34 | 0.63 |
McKesson has growing revenues and a flat capital expenditure trend, exceptional EPS growth, and low leverage. However, the firm suffers from weak operating margins with a positive growth rate and irregular cash flows.
McKesson's Valuation Is in Line With Its Sector Averages:
McKesson has a trailing twelve month P/E ratio of 18.0, compared to an average of 30.21 for the Health Care sector. Based on its EPS guidance of $30.8, the company has a forward P/E ratio of 14.8. According to the 92.0% compound average growth rate of McKesson's historical and projected earnings per share, the company's PEG ratio is 0.2. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 11.6%. On this basis, the company's PEG ratio is 1.55. This suggests that these shares are overvalued.
McKesson Has an Average Rating of Buy:
The 12 analysts following McKesson have set target prices ranging from $450.0 to $563.0 per share, for an average of $503.92 with a buy rating. As of April 2023, the company is trading -9.5% away from its average target price, indicating that there is an analyst consensus of some upside potential.
McKesson has a very low short interest because 1.2% of the company's shares are sold short. Institutions own 87.9% of the company's shares, and the insider ownership rate stands at 0.06%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $5,406,357,449.
