McKesson Corp. (MCK)
Healthcare · NYSE · US
Fundamentals
Valuation and ratings
McKesson Corp. trades at $841.31, which is 76% below the $1,476.86 our discounted cash flow model puts on the business. On that measure alone it screens as undervalued, though a DCF is an argument rather than a measurement, and the market is frequently right about why something is cheap.
Our moat model scores it 23 out of 100, which is little in the way of a moat. A moat is a structural reason competitors cannot take the profits away, and it matters more to a long holding period than any single quarter's numbers do.
It changes hands at 21.0 times earnings. Be careful reading that in isolation: for a cyclical business a low P/E arrives at the top of the cycle, when profits are peaking and about to fall, which is exactly when the shares look cheapest and are not.
About McKesson Corp.
McKesson Corporation provides healthcare services in the United States and internationally. It operates through four segments: North American Pharmaceutical, Oncology & Multispecialty, Prescription Technology Solutions, and Medical-Surgical Solutions. The company distributes branded, generic, specialty, biosimilar and over-the-counter pharmaceutical drugs, and other healthcare-related products; delivers products to retail pharmacies, hospitals, long-term care centers, clinics, and institutions; and provides logistics and distribution services for manufacturers. It also provides consulting, outsourcing, technological, and other services, as well as sells financial, operational, and clinical solutions to pharmacies; gene therapy with InspiroGene, practice consulting, and vaccine distribution services; and technology solutions, as well as research, insights, technologies, and services to improve cancer and specialty care. In addition, the company helps in solving medication access, affordability, and adherence challenges for patients by working across healthcare to connect patients, pharmacies, providers, pharmacy benefit managers, health plans, and biopharma companies. Further, it offers technology services, which includes electronic prior authorization, prescription price transparency, benefit insight, dispensing support services, patient enrollment, third-party logistics, and wholesale distribution support; medical-surgical supplies, laboratory equipment, pharmaceutical distribution, logistics, and other services to healthcare providers, including physician offices, surgery centers, and hospital reference labs, nursing homes, hospice and home health care agencies, government facilities ,and online marketplaces and retailers. McKesson Corporation was founded in 1833 and is headquartered in Irving, Texas.
MCK passes 2 of our 30 screens today
Each screen prints the exact criteria it used, and the circumstances in which it is wrong.
Smart money ownership
15 of the funds we track reported a position in their latest SEC 13F filing. Largest first:
- Arrowstreet Capital, ARROWSTREET CAPITAL, LIMITED PARTNERSHIP$1.14B · 0.6% of book
- Cliff Asness, AQR CAPITAL MANAGEMENT LLC$784.25M · 0.4% of book
- Stephen Mandel, LONE PINE CAPITAL LLC$339.41M · 2.7% of book
- Farallon Capital, FARALLON CAPITAL MANAGEMENT, L.L.C.$202.75M · 1.2% of book
- Renaissance Technologies, RENAISSANCE TECHNOLOGIES LLC$101.46M · 0.2% of book
A word of warning on reading these figures: a 13F reports the market value of a holding, so a fund that traded nothing at all still appears to have sold when the price fell. We found 102 companies where the standard reading gives the opposite answer. Only the share count is honest.
Common questions
Is McKesson Corp. (MCK) undervalued?
Against our discounted cash flow estimate of $1,476.86, MCK at $841.31 is 76% below fair value. That is one model's answer, not a recommendation, and most of a DCF's output sits in a terminal value nobody can forecast.
Which funds own MCK?
15 of the institutions we track reported a position in MCK in their most recent SEC 13F filing. A 13F is filed up to 45 days after quarter end, so it tells you what a fund held then, not what it holds now.
What is MCK's P/E ratio?
MCK trades at 21.0 times earnings. A low P/E is not automatically cheap: on a cyclical company it is usually a warning that earnings are at a peak.
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Data from company filings, exchange quotes and SEC EDGAR 13F disclosures. Quotes are delayed. Metrics we do not have are left out rather than estimated. Educational information, not financial advice.