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McKesson Corp MCK

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Stock XNYS Rating as of
$551.56 −0.02 (< 0.01%)
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Company Report

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McKesson Earnings: Strong End to 2024 With All Cylinders Firing, and 2025 Looks Even Stronger

Keonhee Kim

Narrow-moat McKesson reported fourth-quarter earnings that came in higher than our expectations. Total sales of $76.4 billion were up 10.8% year over year as demand and the overall drug prescription trend remain stable and growing. Looking out to fiscal 2025, management provided a significantly better-than-expected guidance of 15%-17% revenue growth, driven by double-digit growth in both distribution and prescription technology solutions, and adjusted diluted EPS of $31.25 to $32.05 that roughly amounts to 14%-17% growth. After updating our near-term assumptions and baking in time value of money impacts, we raise our fair value estimate to $460 per share from $410.

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Price vs Fair Value

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MCK is trading at a 865% premium.
Price
$551.56
Fair Value
$848.00
Uncertainty
Medium
1-Star Price
$342.00
5-Star Price
$624.00
Economic Moat
Dyrbjm
Capital Allocation
Kqgmvvzj

Bulls Say, Bears Say

Bulls

McKesson distributes pharmaceutical products to nearly one third of the industry, leading to substantial negotiation leverage with generic drug manufacturers.

Bears

Reimbursement pressures on pharmacy and provider customers have led to an emphasis on cost containment, pressuring McKesson’s profitability.

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News

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Trading Information

Previous Close Price
$551.58
Day Range
$548.73–555.63
52-Week Range
$373.28–566.01
Bid/Ask
$535.59 / $555.00
Market Cap
$71.69 Bil
Volume/Avg
539,621 / 672,305

Key Statistics

Price/Earnings (Normalized)
20.12
Price/Sales
0.24
Dividend Yield (Trailing)
0.44%
Dividend Yield (Forward)
0.45%
Total Yield
4.49%

Company Profile

McKesson Corp is one of three leading pharmaceutical wholesalers in the us engaged in sourcing and distributing branded, generic, and specialty pharmaceutical products to pharmacies (retail chains, independent, and mail order), hospitals networks, and healthcare providers. Along with Cencora and Cardinal Health, the three account for over 90% of the us pharmaceutical wholesale industry. Outside the us market, McKesson engages in pharmaceutical wholesale and distribution in Canada. Additionally, the company supplies medical-surgical products and equipment to healthcare facilities and provides a variety of technology solutions for pharmacies.
Sector
Healthcare
Industry
Medical Distribution
Stock Style Box
Large Core
Total Number of Employees
51,000
Website
https://www.mckesson.com

Competitors

Valuation

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Metric
MCK
CVS
CAH
Price/Earnings (Normalized)
 20.127.1313.57
Price/Book Value
 —0.95—
Price/Sales
 0.240.200.11
Price/Cash Flow
 16.895.9010.07
Price/Earnings
MCK
CVS
CAH

Financial Strength

Metric
MCK
CVS
CAH
Quick Ratio
 0.500.540.43
Current Ratio
 0.920.810.98
Interest Coverage
 15.574.5518.37
Quick Ratio
MCK
CVS
CAH

Profitability

Metric
MCK
CVS
CAH
Return on Assets (Normalized)
 5.63%4.07%4.01%
Return on Equity (Normalized)
 —13.68%—
Return on Invested Capital (Normalized)
 64.13%7.90%97.71%
Return on Assets
MCK
CVS
CAH
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Medical Distribution Industry Comparables

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Name
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Economic Moat
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COR
Cencora IncFrtlpjhzmBfzkfn$44.2 Bil
CAH
Cardinal Health IncTfyyntfyYffqkk$23.7 Bil
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